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TSP Funds Dip Along With the Stock Market

good advice about tailoring

software engineer
navair
Wed Jan 16, 2008 10:02 AM

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Ralph, You're just about the only advisor I've seen pointing out that there is not a one-size-fits-all retirement investment scheme. Your point that some of us will be better able to weather the temporary stock market down-turn than others is well taken. I expect my TSP investment to provide only about 30-40% of my retirement income. I plan to keep my TSP money heavily invested in stocks through and after retirement. If we have a couple of bad years maybe I'll a couple less trips to Europe during that period. If the market never recovers we're all hosed anyway.

asset allocation

DOE
IT Spec
Wed Jan 16, 2008 10:34 AM

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I am currently 60/40 stocks to bonds. If the market takes a hard fall, I will move to a 70/30 allocation to increase my stock holdings.

I'm still 10 years away from tapping into that money and I will need to stay with stocks during my retirement as well.

Start the Discussion

engineer
Air Force
Wed Jan 16, 2008 12:24 PM

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Thank you for the article on the TSP basics so far this year. I think there are three areas my fellow TSP'ers need to know besides their retirement plans.

First is the math. Knowing how to manipulate the numbers is vital, e.g. how do you calculate return on investment?

Second is understanding the economy, business, and investment areas. Knowing the names and relationships is equally vital, e.g. what happens when the FRB changes the prime rate?

Third is knowing the news; the current events. What has the FRB done with prime rates recently and what is expected to do next? Why?

I was completely in G Fund when the year started and now completely in F Fund, having captured most of the upward movement for the last few days. If I can keep this up, I am on target for 24% gain this year.

I have done 99% of this independent of TSP. I really hope FRTIB will help with the education and ongoing information needed, instead of driving the herd to less action and less movement.

Re: Start the Discussion

Harry
FRA
Thu Jan 17, 2008 10:57 AM
Actually an alternative way is to invest in one of the Life Funds. They balance the investments for you with some different degree of risk levels. I don't see how F fund would outperform any of the stock funds in the long run.

Down year for stock

Salior
DON
Wed Jan 16, 2008 7:58 PM

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Look for a 10% drop in the market averages this year. If the Dems win the loss will be closer to 20% down. Big government, big programs to "help us all," "Nanny State"ideas really hurt the markets and your 401 K (our TSP). But long term--20-plus years to invest---and you should do well--8 to 10% annual return over the long, long term. Work longer, invest greater, don't retire until about age 70. Our new reality.

Re: Down year for stock

Retired Supervisor
Department of the Army
Sun Jan 20, 2008 6:52 AM
I would be the last person to say anything positive about Democrats, but I would certainly caution about making financial decision based upon political power swings.

Bill Clinton was a clone of Jimmy Carter (not counting lusting versus lunging). When Clinton took office I was in the process of buying a house. I was convinced the economy would mirror the Carter economy and made all my financial decisions based upon that. I couldn't have been more wrong. Every decision I made was the exact opposite of what I should have done.

Withdrawing Money from TSP during Retirement

Retired Federal Employee
OPM
Wed Jan 16, 2008 9:29 PM

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I don't understand why the TSP is not set up so you can withdraw soley from the G fund. During downturns like this, you wouldn't have to worry about the performance of the C, S, I funds. When the market recovers you replenish your G fund with $ from the stock funds and continue your monthly withdrawals from the G fund. As it is now, if you have $50K in the G and $50K in the C and withdraw $1K/mo., $500 comes from the G and $500 from the C. Not good when the mkt is declining

Re: Time Average

Harry
FRA
Thu Jan 17, 2008 10:53 AM

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I would also add that if a Fed is at least 5 years away from retirement, the current down turn actually is a blessing because of the time-average effect of the TSP. If one continue the savings into TSP, the same amount would worth more if the savings are put in during lower fund values.

The key really is not trying to out-guess the market, which rarely produced long-term gains. The built-in time-average is really the best way to accumulate savings - IF ONE IS SOME YEARS AWAY FROM RETIREMENT.

Hang On Tight If You're Not in the G or F Funds!!!

Manager
DOI
Thu Jan 17, 2008 11:01 PM

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I have been VERY nervous about this "fake recovery" caused by the Fed goosing the economy and creating (yet another) bubble, this time in housing.

As a result I have stayed in the G Fund the past several years, and if 2008-2009 turns out to be as bad for stocks as I think it will, I will probably be glad I stayed away from the stock funds. Although I am in FERS I will not be very dependent on my TSP in retirement.

I plan to retire at age 62 and since I have 7 years under CSRS, my annunity will be 40% of my "high three". That along with Social Security, IRA's, other investments we have, and the fact that I should be able to enter retirement WITHOUT ANY DEBT, should put me in a situation where I have more disposable income in retirement than when I was working.

If the stock market goes through the depth of correction that in my opinion is LONG overdue, then I may put TSP funds into the stock indexes, but if not I will just stay with the G Fund and sleep good every night!

Re: Hang On Tight If You're Not in the G or F Funds!!!

analyst
dod
Fri Jan 18, 2008 9:03 AM
It sounds like you're positioned well for retirement. It is worth mentioning though that if you define "several years" as three or four years you've missed out on more growth than you would have given up in losses during the current down period.

Re: Hang On Tight If You're Not in the G or F Funds!!!

Federal Employee
Department of Justice
Sun Jan 20, 2008 10:28 AM
In 2001 my TSP account decreased by $39,000 because I listened to others say, "Leave it alone, it will come back. It always does." In the past few years I had played in the C, S, and I Funds and had built a decent balance. In July 2007 when the market declined, I left everything as it was (30%-C; 35%-S and 35%-I). I lost $14,000 in a few days, but within ten days I had made it back, plus another $7,000. Beginning in October I began losing money and again left my breakdown the same. I was down $23,000 at one point, but by Christmas Eve I was back to within $1,000 of where I was in October. Last Thursday, after being down $33,000 since Christmas Eve, I moved everything from the C-Fund. On Friday I lost $222.00, but that's far better than the $4000-$5000 I've been losing on a daily basis.

Something has to give with the economy or those of us within five years of retirement are in a world of trouble.
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