Thread: TSP Investing

So that explains why I feel so isolated in my aggressive stock fund investment! I just knew there was a reason. :P

I could only invest for the 2nd half of last year due to being a new employee, but I still managed an 8% return (not bad considering I couldn't get them to give me my f'ing pin# until November due to an address mix-up on their part - which forced my contributions into G from the time they began on June 1 'til the time I got the pin in early November... argh!).

With that said, I'd probably be doing as well or slightly better in G all of 2004 than I have with my moves (which have netted a paltry 2.55% yield between Jan 1 and Oct 1). Heh. If I take the thinking out of my investing, I might do better (it's worked for the past month!). :^

Mike
Like your comments!
Look at the math (asking for your help/comments). If TSP has net assets of 133B and there are 3.2M members, then the average account has 42K. If42 is half, then we have a 0-84 factor. 84K x 4% = a monthly check of $273 in retirement.
What has to be consideredis that under a traditional IRA, under standard conditions, you will only be able to withdraw about 4-5% annually and keep principal +COLA intact. I know that a lot members will exceed or be under the averages. But,the information needs to be an awareness. i.e., what you bought in 1984 has doubled in price to 2004, COLA (cost of living allowance) is a big factor in planning. The TSP and transfer into retirement has to be considered accordingly. It is not right that members reach their retirement only to find that the funds are not there, and especially when they,,, could of been there. TSP is as it says is a savings plan (a Do-it-yourself-plan). They have some good index funds (C-S-I). Do we buy and hold, or do we use our accounts and the system to our best advantage. My opinion is to use the system to our advantage. If we have a bull market, great. If we have a trending market, then lets consider timing. If we have a bear market then lets go to the G-fund. Worst, let's not have members lose money when they don't have too?
My $0.02

PS: If members on this web site = X, consider where the other members are?

Spaf - your math is correct. However, an average of $42k doesn't tell us much. If we knew the median value - the one which marks the point above which half the investors are and half are below - would be a lot more useful in assessing the health of our thrift investors (especially if it was combined with a chart showing how different age groups fared, particularly those over 45).

There are solutions to this problem, but they aren't pleasant, particularly for those who have under-invested for whatever reason. Here are my suggestions to them (assumption here is that they aren't market timers with systems to maximize their gains - these are probably novices who fear the market and investing/witholding):

1. Raise your pre-tax witholding - at least high enough to get the full matching from the government. This is good both for investing and for taxes. Plus, the matching money is FREE. It's like a raise. I don't know where you all fall on the government pay scale, but the matching alone for me is worth over $75 per pay period. That's roughly $2,000 per year... and I'm not all that high on the payscale!

2. No matter what you think about the market conditions, do NOT put your money 100% into the G fund for an extended length of time. Long-term, you are far better off investing in stocks. If you fear sudden downward movements or are fairly close to retirement, at least split the allocation into fifths (20% G, 20% F, and so on). This will both serve to cut your losses in a bear market and enhance your gains significantly in a bull market.

Solutions for the government:

1. Raise the automatic 1% witholding rate. With social security likely to have major problems dealing with the influx of retirees, it makes sense to raise this rate so that people will be using more of their own money for retirement whether they want to or not. With the power of compounding, a 2% rate of witholding can make a world of difference by the time a person retires vs. 1%.

2. Instead of defaulting contributions to 100% G at the start, why not default them to 20% across the board (so if people are so laissez faire about their retirement, at least they'll be investing)? This is the L fund... without the L fund. Get the point?

Spaf wrote:

Fund Returns Net Assets
20012002 2003 2003
G 5.39 5.00 4.1153.3B
F 8.61 10.274.11 10.5B
C (11.94) (22.05) 28.5456.8B
S (02.22) (18.14) 42.91 5.9B
I (15.42) (15.98) 37.94 2.3B

Amazing. Still only 8 billion out of 133 billion in the S and I funds combined, and there's more in G + F than C + S + I.That tells me most people still don't pay attention to their accounts, even coming off a 40% year in the S fund in 2003.

Of course these numberswere from February and I've only been around since January. We may have different numbers now .

Mike and Tom

Mike has some good points. I wish I had more numbers to run on TSP. We had 3.2M members in TSP at the start of the year, and 133B net assets. The numbers have changed to present. Its not the numbers, but the fact that members are in the G and C funds predominately. There is very little education out there to say maybe you should be this or that at any particular time. It' like blind investing, unless you stay up with the i.e., TSP returns and market activity.You get your retirement briefing just before you retire. Sort of like getting your flu shot after having the flu.

The TSP is as good or equal to any system out, as far as I know. I like being able to transfer funds within 1-2 days depending on the environment. I like the index funds they have, I think they are great. I don't like being un-informed on how to properly manage or deal with these funds, thats my point. Thats the reason for being a member of this web site! The problem is that, according to the numbers, a lot of members are not well informed. When your membership reaches all members, I'll stop complaining! Hows that?

Spaf wrote:

When your membership reaches all members, I'll stop complaining! Hows that?

Deal.

Spaf, Mike... at retirement I am planing to transfer into an IRA traditional account at Schwab that will allow me to trade the market on similar indexes that the C, S, I funds such asSPY, IWM... I belief I can perform 20% plus a year being very conservative... I even see 4% per month being aggresive... depending how much more timeI do have before retire... 1.25 power the number of years I got left and timesmy account will giveme a good estimate of what I am going to retired with...

For example

1.25^12 years left to retirement= 14.55 X? K =# of $$$ not bad...

even a !0% conservative return at that point is attractive... remember... 25 % is not very aggresive... I belief the market can give me more even on a bearish market... it is sad we can't short or buy cover calls... but at least we got a good G Fund nest for downward times... :^

Tom,

It tells me that the big TSP community is conservative... do not know or do not want to invest on the market... they still remember when the bubble burst... perhaps they lost a lot of money... I do not blame them... I pesonal never invested on the I Fun...I know I lost by not doing so... now I belief the I fund is a bubble that will burst once the interest rate start going up... the dollar strong and oil down... I do not know when buth I rather inverst on the S fund... small middle caps doing great...

Leon

It looks to me like the best fund to be in for thrift is F when there's a bear market. Of course, there are always opportunities to make money in stocks, if you are adventurous enough to put your money at risk in the mini-trends each year.

I'd be happy with just a 10% average return for my investments each year. That would give me plenty of money at retirement (and then some).

Mike wrote:

It looks to me like the best fund to be in for thrift is F when there's a bear market. Of course, there are always opportunities to make money in stocks, if you are adventurous enough to put your money at risk in the mini-trends each year.

I'd be happy with just a 10% average return for my investments each year. That would give me plenty of money at retirement (and then some).

Dito!!:^

S[af,

History tells me that the G Fund is better that the F Fund on bear market...besides is more secure... F Fund is not worth the risk in my humble opion...

10% return at retirement is GREAT... but now I feel confortable to milk all I can milk... 25% 30% 50% 60%... the power rate increase is very powerful multiplier... :^