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Is This What They Mean by Stock Market Volatility?

FedSmith said to be cautious

Aviation Safety Inspector
FAA / DOT
Wed Feb 28, 2007 12:41 PM

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After reading an article by FedSmith a little while ago I reallocated my TSP. Like many others, I lost money yesterday, but I didn't lose near as much as I would have if I had not made that reallocation. Yes, I know FedSmith is not a crystal ball gazer or a financial advisor, but in this case, he made me stop and think long enough to make what turned out to be a good decision.

Thanks FedSmith.

Re: FedSmith said to be cautious

editor
FedSmith.com
Thu Mar 1, 2007 9:59 AM
Thanks for the comment; we are pleased you found the article to be useful in managing your TSP investments.

stock market volatility

social worker
VHA
Wed Feb 28, 2007 2:12 PM

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I always wondered what can a federal employee do to maintain the gains made from the I and C funds?I have 40 in I ,40 in C and 20 % inG funds.As you know monies have gone up in C and I as of late but how do you keep that money?Do you change the % in C and I and raise the % in G thus cushioning/keeping your profits?How is that done? Thank you.

fers employees at greater risk

AUSA
DOJ
Wed Feb 28, 2007 3:10 PM

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Yesterdays markets shows the much greater retirement risk that FERS employees face compared to their CSRS counterparts. CSRS employee retirement has a generous 2% per year of service annuity calculation, with a full CPI COLA increase every year and NO market risk. FERS employees can choose from a range of financial instruments in TSP and only get a 1% per year of service annuity and a COLA that is NOT the full CPI if the CPI goes over 2% a year. Yes, maybe FERS employees will hit it rich in the markets and they could have a better retirement than CSRS employees. They could also be in the poor house if financial markets have a catastrophic decline. FERS employes, as yesterday shows, live in a world of risk.

Re: fers employees at greater risk

Analyst
DoD
Wed Feb 28, 2007 6:06 PM
AUSA, your generalization about FERS risk is misleading. If used properly a FERS portfolio will be allocated very conservatively when near retirement with little exposure to stocks, thus little affected by a day like yesterday in the market.

Likewise, if used properly a FERS portfolio will have quite a bit of stock market exposure early in one's career. The risk to retirement is low when you have many years of working ahead of you even if you have high exposure to stocks since the long term growth rate of stocks has always been better than bonds or cash. In fact if you take any 20 year period(including the 29 crash or 9/11) in our history stocks have always outperformed bonds or cash by a significant margin.

Re: fers employees at greater risk

retired civil engineer
usfs
Wed Feb 28, 2007 7:04 PM
Didn't you leave out a small detail, as it relates to FERS? The Government matches your investment up to 5%, I think? Wow!
you keep putting in the max of your pay for matching and you'll
be doing fine, considering the favorable risk for plentiful gains on diversified funds over the past decades. If the stock market tanks
for the long haul take heart, we'll all be hurting. Misery likes company.

Re: fers employees at greater risk

analyst
DoD
Wed Feb 28, 2007 8:09 PM
For what it is worth to you, we have it a lot better than the vast majority of those who are paying our salaries by paying taxes. I realize we pay taxes as well but, generally, our salaries are much higher than the average American household; we get to take our health benefits into retirement; and we have the equivalent of a 401(k) plan that is the envy of most private sector employees. In other words, I would not be whining as much.

Stock Market Volatility and Withdrawals

Director, Headquarters Operations
Defense Commissary Agency
Thu Mar 1, 2007 10:48 AM

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I would like to know why an interfund transfer cannot take place simultaneously once submitted, as opposed to not taking effect until sometime that evening after the markets close. If I contact my stock broker and say "Sell all my stock in XYZ Company", he's not going to say "Okay I'll sell it tonight after the markets close." It's sold immediately! Granted, the current system is far improved from the earlier days when the number and frequency of our transfers were severely restricted, but today's technology should permit instantaneous transfers in order to minimize losses.

One additional comment. I'm still awaiting some plausible explanation from the TSP as to how funds can be removed from a TSP account by someone other than the account holder? How is that possible and how is it that I become liable for my losses as a result of the TSP's failure to implement appropriate Information Assurance/Security measures that would preclude this from happening?

Re: Stock Market Volatility and Withdrawals

Supervisor
DHS
Thu Mar 1, 2007 3:32 PM
Regarding the question about interfund transfers, selling a stock is not the same as selling a mutual fund (which is essentially how TSP funds are constructed). At any given point during the day we know how much a certain stock is worth, I expect it's much more difficult to instantaneously ascertain how much an index of many different stocks is worth in the middle of the day.

Most likely that's the reason that transfers of mutual funds within other retirement plans and private sector IRAs happen at the close of the business day as well.

Market risk analysis stirs some complaints

AUSA
DOJ
Thu Mar 1, 2007 2:28 PM

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It seems that some think my market risk analysis of FERS is "misleading" and others think we should not evaluate the issue at all (I think the word was "whinning") because other Americans are worse off. Well, it is certainly an uncontested fact that a financial market based retirement, such as TSP or a 401k, puts more risk on the employee and less risk on the employer. That's an uncontroverted fact. Most fianancial planner recommend that you remain invested in at least some stock for your entire life--many recommend no less than 25% in stock, even in old age. Is there risk--you betcha. Markets can and have crashed. Some lengthy periods in the stock markets have yielded very low returns--look at the 1930s and 1970s for example. PS--bonds can go down too. It is unwise not to recognize the risk or fully understand that defined benefits retirement plans (i.e. CSRS) do offer greater security and much, much less risk. Hope discussing this issue is not seen as "whinning" or "misleading"

Re: Market risk analysis stirs some complaints

PO
USCG
Fri Mar 2, 2007 6:43 AM
You want no risk---buy a toaster from Sears.

TSP and market loss

General Supply Specialist
Department of the Army
Fri Mar 2, 2007 11:57 AM

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Anyone who panicked and transferred all their C, S, and I amounts to the G fund on 28 Feb almost certainly bought high and sold low. Bad form. Unless you are getting ready to "head to the house" (Army-speak for retirement), you are in it for the long term and should take that perspective. This means you shoudn't let market drops panic you into "losing" all the gains you've recently made by running for the G fund. Take a deep breath, grit your teeth, and ride it out. If your allocation plan is sound, leave what you have where you have it. The down market of the early 2000's was followed by double digit increases, and those that retreated to the G fund lost out. Many would say that when stocks go down is the best time to buy - stocks are on sale! Buy more when they are cheap, and when they go up again, your growth in shares will balloon your balance. Another thought to take comfort from in down times - until you sell (transfer) your shares, you haven't lost anything!

Volatility = losing (sic) in short term?

software engineer
navair
Mon Jul 30, 2007 10:19 AM

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Well, volatility means loosing AND gaining in the short term with the over-all trend determining whether my investments are actually up or down.

The drop last week is obviously a correction from an over-bought position (look at the long-term trend).

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