Step 3 to Crush the Thrift Savings Plan – Asset Allocation
The Thrift Savings Plan (TSP) is the military’s retirement account. Learning how to maximize its utility should be high on your financial priority list. At MCCareer.org, I’m going to create a guide that will show you how to crush it with the TSP. We already showed you step 1 and step 2 in that guide. Here’s step 3…
The 3rd Step to Crush the TSP – Asset Allocation
You’ve probably heard that you shouldn’t put all of your eggs in one basket. That is what asset allocation is all about…making sure your eggs are in multiple baskets.
Asset allocation can be complex. There are entire books written about nothing but asset allocation, like The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk. That’s a good book if you want to nerd out, but I’m going to try and simplify asset allocation for you.
What Assets are Available in the TSP?
There are only five assets available:
- G Fund – US government bonds specially issued to the TSP
- F Fund – US government, corporate, and mortgage-backed bonds
- C Fund – stocks of large and medium-sized US companies
- S Fund – stocks of small to medium-sized US companies (not included in the C Fund)
- I Fund – international stocks of more than 20 developed countries (soon to include emerging markets)
What is not available? There are a few major asset classes unavailable. You cannot invest in real estate or international bonds. International emerging markets will be added to the I Fund soon but are not currently available. If you want exposure to any of these asset classes right now, you’ll have to get them in your other investment accounts, like your IRA or taxable account.
How Do I Pick My Asset Allocation?
If in step 2 you decided to use L Funds, you don’t need to pick an asset allocation for your TSP. The L Fund takes care of it for you.
If you are not going to use L Funds, one way to decide on an asset allocation is to take this Vanguard survey. At the top of the page it will give you a suggested allocation, such as 80% stocks and 20% bonds.
Another way is to borrow from trusted investment experts. Here are a few opinions.
In The Elements of Investing: Easy Lessons for Every Investor
, Burton Malkiel recommends these age-based asset allocations:
- 20-30s – bonds 10-25%, stocks 75-90%
- 40-50s – bonds 25-35%, stocks 65-75%
- 60s – bonds 35-55%, stocks 45-65%
- 70s – bonds 50-65%, stocks 35-50%
- 80s+ – bonds 60-80%, stocks 20-40%
In the same book, Charlie Ellis recommends these asset allocations:
- 20-30s – bonds 0%, stocks 100%
- 40s – bonds 0-10%, stocks 90-100%
- 50s – bonds 15-25%, stocks 75-85%
- 60s – bonds 20-30%, stocks 70-80%
- 70s – bonds 40-60%, stocks 40-60%
- 80s+ – bonds 50-70%, stocks 30-50%
Mr. Ellis is a little more aggressive than Mr. Malkiel because he recommends a higher allocation of stocks.
There are other ways to come up with a reasonable asset allocation, such as financial “rules of thumb.” The founder of Vanguard, John Bogle, is famous for creating the “age in bonds” rule of thumb. It says that whatever your age is, that is the percentage of your investments that should be in bonds. The rest should be in stocks.
For example, I’m 43 years old, so his rule would say I should have 43% in bonds and 57% in stocks.
This rule has been criticized as being too conservative, so some have changed it to 110 or 120 minus your age as the percentage you should have in stocks. For example, for me this would mean:
- 110 minus age 43 = 67% in stocks, the rest (33%) in bonds
- 120 minus age 43 = 77% in stocks, the rest (23%) in bonds
There are certainly other ways to come up with your asset allocation. You could ask a financial advisor. You could read other books. You could read other blog posts, like this one on the Bogleheads Wiki.
What About Other Assets Like Your Pension and Social Security?
This is a tough issue. Some would argue that pensions and social security are income streams and that they should not play into your asset allocation decision. This is what Vanguard argues. Others would argue that they are “bond-like” and should be factored into your asset allocation and counted as a large pile of bonds. Here are a few thoughts on the subject from blogs I follow and trust:
- The Oblivious Investor – How Pensions and Social Security Affect Asset Allocation
- Humble Dollar – A Price on Your Head
The Bottom Line – Asset Allocation
Somehow you have to figure out your desired asset allocation. The info above will hopefully facilitate that. Once you have a target asset allocation, now you have to apply it to the investments available in the TSP. Take the 4th Step…invest.
Finance Friday Articles
Here are this week’s articles…
8 Things To Do With Financial Independence Besides Retire Early
Automated Cash Flow Systems: Put Your Money on Autopilot
Comprehensive List of Physician Finance Bloggers, Past and Present
Debunking the Silly “Passive is a Bubble” Myth
Disability Insurance for Two-Doctor Couples
Risk Adjusted Returns: What’s the Point?
The Road to Burnout Helped Me Find My Purpose
Top 5 Expenses that Go Down in Retirement
Why Does The Stock Market Go Up?
Throwback Thursday Classic Post: Specialty Leader vs Detailer – What’s the Difference?
Many Medical Corps officers don’t understand the difference between their Specialty Leader and their Detailer. After you read this post, this won’t be a problem.
DIFFERENCE #1 – WHO THEY WORK FOR
A Specialty Leader works for Navy Medicine (BUMED), the Surgeon General, and the Medical Corps Chief while a Detailer works for Navy Personnel Command (NPC or PERS). NPC/PERS is a line command, while BUMED is obviously medical. This difference is probably not of significance to the average Naval physician, but it can make a difference at times because these two commands (and people) will look at things from a different perspective.
For example, let’s say you are one of two subspecialists at NMC Camp Lejeune and you have a fairly light clinical load. You decide you want to leave early to get to your next command, Naval Medical Center Portsmouth (NMCP), because they are actually down one provider in your specialty due to the illness of another member of your community. Your Specialty Leader will probably endorse this early move because it makes sense. You are underemployed at Lejeune and there is a need at NMCP.
Your Detailer, however, will look at it differently. First, you haven’t served your full tour, so moving you early will require a waiver that may be denied by PERS. This largely has to do with money and PCS rules and has nothing to do with your specialty or the needs of the Navy. I’m not saying that Detailers don’t care about the needs of the Navy because they do, but they are constrained by the rules of PERS while a Specialty Leader is not.
DIFFERENCE #2 – WHAT THEY DO
A Specialty Leader serves as a liaison between you, BUMED, and your specialty as a whole. He or she also coordinates deployments, although the control they have over this was lessened by the return to platform-based deployments (deployments determined by what billet you are in or what unit/platform you are assigned to rather than whose turn it is to deploy). They also serve as a consultant both to you and your Detailer when it comes to career management and PCS moves.
A Detailer is your advocate to help you advance in your career, prepare for promotion boards by improving your officer service record, and negotiate orders for your next PCS. They will often speak with both you and your Specialty Leader while trying to balance your needs with the needs of the Navy. They also are the final approval authority for extension requests and actually write your PCS orders.
DIFFERENCE #3 – WHAT THEY DON’T DO
Specialty Leaders do not write orders. Many physicians think that the Specialty Leader is the one who decides what orders they get and where they PCS, but the reality is that Specialty Leaders can’t write orders. Only Detailers can, therefore it is the Detailer who makes the final decision in nearly all cases. If there is a good Specialty Leader-Detailer relationship, most of the time both are in agreement and there is no controversy, but about 5% of the time there is at least some level of disagreement that has to be worked out.
Detailers can write your orders to a command, but they do not influence who gets command-level leadership positions. For example, you may want to go to Jacksonville to be the Department Head of your specialty’s department. A Detailer can write you orders to Jacksonville, but which physician the command picks to be Department Head is up to them, not the Detailer (or the Specialty Leader).
Specialty Leaders will often talk to commands, but Detailers usually do not. The Detailer is SUPPOSED to talk to three people – you, the Specialty Leaders, and the Placement Officers. The Placement Officers are officers at PERS who represent the commands. You can think of them as the detailers for commands. They make sure that commands aren’t taking gapped billets, that the providers sent to the command meet the requirements of the billet they are entering, and weigh in on other issues like extension requests.
I say that a Detailer is SUPPOSED to talk to three people and USUALLY does not talk to commands, but the reality is that commands frequently call the Detailer instead of talking to their Placement Officers. This often happens because the Director at a command knows the Detailer but doesn’t know the Placement Officer. In addition, the Detailer is usually a physician (3 of 4 Medical Corps Detailers are physicians, the 4th is a MSC officer) and the Placement Officer is always a MSC officer. Physicians like talking to other physicians.
Finally, Specialty Leaders do not alter your officer service record. In fact, unless you send it to them, they can’t even see it or your FITREPs. Detailers, on the other hand, can see just about everything and can update/change some things, mostly additional qualification designators or AQDs.
WHY SHOULD I CARE ABOUT ANY OF THIS?
Because you must actively manage your career to get what you want. This means you should talk with both your Specialty Leader and Detailer 9-18 months ahead of your projected rotation date (PRD). You should discuss your short and long-term goals, whether you want to PCS or extend, whether you are planning a Naval career or want to resign or retire, your family situation, and your medical situation if applicable.
Most importantly, though, is to be honest with both your Detailer and Specialty Leader. Most Specialty Leaders get along well with the Detailer, so if there is any disagreement between the three of you make sure that you keep things professional and respectful at all times. It’s a small Navy and, to be honest, it will be readily apparent if you are playing one off against the other.
FY20 Enlisted to Medical Degree Preparatory Program Announcement
Here’s a link to the NAVADMIN:
FY20 Enlisted to Medical Degree Preparatory Program Announcement
VADM Raquel Bono: The End of a Brilliant Tenure, the Beginning of a New Chapter
VADM Bono retires today. Here’s an article about her:
VADM Raquel Bono: The End of a Brilliant Tenure, the Beginning of a New Chapter
US News and World Report – The Military’s Top Medical School Could Be in Peril
Here’s a link to this article:
A Hearty Thanks to MCCareer.org Readers – CDR Schofer is Now CAPT Schofer and the Incoming Deputy Chief of the Medical Corps
Starting a blog about how to promote to Captain is perhaps a little nerve racking until you’ve actually done it yourself. Today is that day!

(Note – Neither the Department of the Navy nor any other component of the Department of Defense has approved, endorsed, or authorized this blog.)
Whew! I guess I no longer need to worry about being that guy who told everyone how to promote to Captain but couldn’t do it himself.
Also of note, this week I check-in to BUMED as the next Deputy Chief of the Medical Corps, which is a dream job of mine. Thanks to all the readers of this blog who definitely contributed to this unexpected turn in my career.
How to Get an Official Promotion Certificate
Pulled this off the Medical Corps Sharepoint page (pick your e-mail certificate)…
Officers interested in receiving an official promotion warrant/certificate should email Mr. Jeffrey Bellew at jeffrey dot bellew < at > navy dot mil and include:
- Full Name
- Rank Promoting to
- Date of Rank
- Mailing address
Please do not request more than 3 weeks prior to promotion date.