Food (burgers & stocks) for thought
Tuesday - 6/16/2015, 2:30am ET
What's the difference between a hamburger and a share of the TSP's C, S or I stock index funds. Other than the obvious, for many people, it's this:
My favorite close-to-the-office restaurant has half price burgers every Wednesday. They sell like hot cakes. No pun intended.
The burgers are great the other six days of the week, but sales spike on Wednesday. Makes sense. But share prices drop 15, 20 or 50 percent, many people lose their appetite. They know the buy-low-sell-high-rule, but many don't practice it.
At the depths of the recession in 2008, hundreds of thousands of workers (and retirees) moved out of the slumping C, S and I funds into the safety of the G fund's Treasury securities. But those who held on or continued to buy (at what it turns out were sale prices) have done very well indeed.
Arthur Stein, a Washington area financial planner, made the hamburgers-to-stock comparison to me. Many of his clients are active or former feds, so he's been-there-done-that financially and emotionally with lots of people.
Stein will be our guest on tomorrow's Your Turn radio show. He's going to talk about lots of TSP related things including:
- In 2014, the U.S. stock market did well, but international stocks went down. So what?
- Low interest rates continue to help people borrowing (for a home or cars) but hurt savers (the low rate of the G fund).
- The pros and cons of a Roth IRA versus the regular TSP.
- The dangers of being too cautious. The tradeoff between risk and reward.
- Given the (nearly always) shaky condition of the world, do you still have money in the TSP's I fund. It has lagged the C and S funds for a long time. But this year, the I fund has increased three times as much as the C fund, and almost twice as much as the S fund. Buying low and selling high again?
So, is it time to reexamine your portfolio and investing pattern? Listen to Your Turn Wednesday at 10 a.m. EDT either streaming over www.federalnewsradio.com or at 1500 AM in the D.C. area. If you have questions you can call in after 10 a.m. or email them to me at: mcausey@federalnewsradio.com.
Posted by: sarah_oz@yahoo.com
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