I Keep Trying (and Failing) to Time the Market with My TSP; What Am I Doing Wrong?

I keep trying to time the market with my TSP investments, only to end up buying high and selling low. How should I allocate my money into selected funds with the idea of leaving it there to ride out the highs and lows?

Q: I seem to keep making the same mistake. When I start to feel concern about the economy and steep losses in the stock market, I make a fund transfer of 100% into conservative TSP option(s). Then, when things look better in the stock market, I then make another fund transfer back into a much more aggressive TSP option. I never seem to get it right, and I seem to make changes at the wrong times. How should I allocate my money into selected funds with the idea of leaving it there to ride out the highs and lows?

A: A smart man once told me, “You will rarely get ahead repositioning investments based on short term market movements. It’s not timing the market that generally ends successfully, it’s time in the market that generally gives us the best chance at success.”

One of the most misunderstood and most important pieces to proper investing is knowing who you are as an investor. In other words, understanding and being faithful to your “Risk Tolerance.” Note: Even if all of your retirement savings are in the TSP, you are still an investor.

What is “Risk Tolerance?” Put simply, it is a measure of how much financial pain (losses) one can comfortably endure vs. the amount of reward (gain) they desire. Finding your Risk Tolerance is the key to unlocking that age old question, “How should I be invested?”

No one can predict the future. But, pin-pointing your individual “Risk Tolerance”, is an attainable goal and likely easier than you think. That knowledge is crucial in assisting in the development of both an intelligent and rational retirement plan. A plan that, addresses desired growth potential, while being equipped to handle times the markets dips.

So, how do you find your “Risk Tolerance?” There are several risk measuring programs available. I have one I offer free on my website (silverlightfinancial.com); just look for the “Risk Analyzing Quiz” button. It can be used as a stand-alone tool or as part of my company’s proprietary Federal Retirement Readiness Review (FRRR). The risk analyzing quiz will tell us how you SHOULD be invested. Then we look at your TSP (and/or other retirement accounts) to determine if your accounts are in lines with your quiz results.

Disclosure: Investing involves risks, including the loss of principal. Securities offered through LPL Financial, member FINRA/SIPC.

About the Author

Randy Silvey is the published author of You FIRST, Federal Employees Retirement Guide, one of the bestselling books of its kind on Amazon and Kindle. For over 18 years, he’s been educating and guiding Feds in pursuing wealthier retirement lifestyles. Randy can be reached at 816-524-1515 or visit his website at www.silverlightfinancial.com. Securities offered through Infinity Financial Services. Member FINRA/SIPC.