Bush's deficits and the coming crunch.

[DanS]

Government paper is one of the 5 funds available.

Foreign markets are important for diversification, although I would suggest that because of the circumstances of the US, the companies in the domestic fund would give adequate coverage to overseas markets. Maybe it's different with Canada.

Not sure about income trusts. There is a bond index fund that is part of Bush's plan, so that probably would cover it more than adequately.

[KrazyHorse]

Bond market != income trust

[DanS]

Oops. There is an international fund available under Bush's plan, which is already time-tested with government workers.

http://www.tsp.gov/rates/fundsheets.html

[KrazyHorse]

The point is that the real world is complex. Drawing five categories and allowing people to put their money in one or some combination thereof is a ****ty compromise solution.

You get some diversity and some growth.

Well-managed funds can be both safer and higher-yield.

[KrazyHorse]

So one of the "indices" available is actually...a managed government fund?

[DanS]

Yes, the real world is complex. No doubt about it. But a government fund is a tricky beast. They have worked in other places. They have also failed in other places. Index funds are damn near fullproof.

[DanS]

Originally posted by KrazyHorse
So one of the "indices" available is actually...a managed government fund?

The choices that the managers are making are really quite small. It's a matter of buying a short-term US T-Bill. Hardly rocket science. And hardly any discretion.

The Thrift Savings Plan is really the gold standard in all of this. It is battle-tested.

[KrazyHorse]

Even the best performer out of the 5 TCP funds over the last 5 years fails to match the CPP investment fund's return.

A couple of the rest aren't even keeping up with inflation.

[DanS]

A couple of the rest aren't even keeping up with inflation.

Which ones are those?

[KrazyHorse]

5 year, Dan.

[DanS]

http://www.tsp.gov/rates/monthly-history.html

Look at the 10 year. They're all well above inflation.

Are you playing games with the numbers by only looking at the 5 year returns, or something?

[KrazyHorse]

I know. I'm using 5 year because the CPP investment board didn't exist more than 6 years ago.

[DanS]

Yeh, well, that's pretty lame. It's taking one of the 5 worst year periods in US stock market history.

[KrazyHorse]

Pfffft.

One of the (or simply the?) first invesment boards designed to meet the needs of a defined-future benefit plan using present contributions through investment in capital markets.

Compare to the US plan, which is to buy index funds.



Good luck with that. Come back and visit me when SS has reached solvency.

[KrazyHorse]

Hmmmmm.

Our plan managed to make money in that environment.

Gee, I wonder why I was talking about the problems in an index fund before.