Been A Tough Decade For TSPers

[mlk_man]

Will TSP Investors Break Even This Decade?
By Ralph Smith (http://www.fedsmith.com/about/ralph.php)
2/14/2006
Click here for more articles by Ralph Smith (http://www.fedsmith.com/articles/articles.authorlist.db.php?a=2)

If you are a federal employee, how is your retirement portfolio spread out among the options available to you in the Thrift Savings Plan (TSP)? Have you put all of your money into one fund or have you diversified your investments?

Diversification is usually a good investment strategy for any investor. We can lament our past investment mistakes. We still can't predict the future. Some federal employees are lamenting their return rate in the C fund. For the reasons outlined below, that is understandable and perhaps unfortunate. The best you can do now is to learn from your mistakes.

Any TSP investor who does not include the I and S funds in your portfolio should reconsider. These funds have had very good returns in the past three years and, if you did not have some of your investment portfolio in these funds, you missed out on the highest rates of return for TSP investors (http://www.fedsmith.com/corners/tsp/annualaverage.displayall.db.php).

More ... http://www.fedsmith.com/articles/articles.showarticle.db.php?intArticleID=826

[Birchtree]

Did he say the C fund was for dog lovers - I love dogs. Dogs of all kinds deserve attention. I was searching for just the right dog when I fell favor to the unloved C fund. The author IMHO is concentrating his strategy on number of dollars earned, I've been concentrating on share accumulation. The more shares of said dog owned the bigger the potential for more dollars when the time is right. That's what we all have - time.

Dennis-permabull#2 and renegade contrarian

[charmedboi82]

Did he say the C fund was for dog lovers - I love dogs. Dogs of all kinds deserve attention. I was searching for just the right dog when I fell favor to the unloved C fund. The author IMHO is concentrating his strategy on number of dollars earned, I've been concentrating on share accumulation. The more shares of said dog owned the bigger the potential for more dollars when the time is right. That's what we all have - time.

Dennis-permabull#2 and renegade contrarian

That's a very good point. At some point, it's bound to go up. You've accumulated more shares at a lower price all that time, so that now, when it does go up, a large number of shares invested in these funds will mean a huge increase of value even with just a moderate gain. I wish I had the ability for all of that, but alas, I'm just starting out (which I guess could be a good thing).

[yakers]

The number of shares AND their price are both important. Buying shares when they are "dog low" is a good thing, its a little less pleasant if you watch shares you already purchased go down. DCAing over a long period of time can work well but you have to watch your fund go down and keep buying. I was lucky for 2005, i had 40% G, 20% C, S & I. That workd for me as I am generally avoiding the F fund and I am 55 and expect to retire in the next couple years so I want to hold a good bunch of G. Oh, I did switch new contributions to a L fund. If the original poster doesn't want to DCA the C fund over a long period of time a L fund would be a good alternative. But over a long period of time, like 20 years, the C should do just fine, but there will be some bad years-those are the years to buy. Just my 2 cents.

[cowboy]

That's a very good point. At some point, it's bound to go up. You've accumulated more shares at a lower price all that time, so that now, when it does go up, a large number of shares invested in these funds will mean a huge increase of value even with just a moderate gain. I wish I had the ability for all of that, but alas, I'm just starting out (which I guess could be a good thing).

What if C fund is not a dog and he actually sat and put in on the high end of it all this time? The thing about cost averaging is you still have to sell your shares at a higher value then your average is at the time of sale otherwise it means nothing. So basically if the market goes sour and you retire the benefit is less. I invested in C too until now with the internet I can become more active in the TSP investments. Any type of investing is a good thing! If your just starting to learn now is the best time before you accumalate a large amount of cash. Basically everyone here is cost averaging into a fund(s) for retirement. I may use 2-3 different funds another may just use one fund. I am learning more all the time.