Your TSP account: Look but don't panic!
By Mike Causey | @mcauseyWFED
October 14, 2015
If you've been closely following the returns on your TSP account this year it hasn't been much fun.
Returns for the first three quarters of 2015 (January through September) were dismal to say the least. The C, S and I stock index funds were down 4-to-6 percent. The G (Treasury securities) and F (bond) funds barely kept pace with inflation — which was almost nonexistent. But things seem to be looking up.
Financial planner Arthur Stein said, "The bad news just became slightly better." He points out that the first nine days of the fourth quarter restored much — but not all — of the losses.
So does that mean you track your TSP balance on a daily basis, rejoicing when it's up or worrying when it's down? Trying to buy low and sell high? "Just the opposite," said Stein, a Bethesda, Maryland-based CFP. "Stocks (the C,S and I funds) are a good long-term investment. Don't look at stocks with a short-term perspective."
Trying to time the market, to "know" and then buy when it is low (and stocks are on sale) and then "know" and then sell when it has peaked, rarely works. John Bogle, founder of Vanguard, said he can't time the market, and he never met anyone who could.
Stein said that historically, "Investors in the TSP's stock funds didn't need to to buy and sell at the right time to profit. They needed to buy and hold for a sufficiently long period of time. Those that did," he said, "saw their stock fund returns outperform the F and G funds."
Stein will be our guest on today's Your Turn radio show at 10 a.m. ET. He'll talk about the TSP, and the pros and cons of its Lifecycle funds. And the importance of taking the long view when investing for the future.
For FERS employees (with their reduced civil service benefit) investments in the TSP could provide anywhere from one-third to one-half of the money they have to spend in retirement. The 5 percent match they can get from the government is the equivalent of a 5 percent, tax-deferred pay raise. But you gotta play to win.
If you have questions for Arthur Stein send them to me before showtime at mcausey@federalnewsradio.com.
Retirement Ready Seminar
Benefits expert Tammy Flanagan will host a one-hour retirement planning webinar Thursday, Oct. 15, at 2.p.m. ET. The program is sponsored by the National Active and Retired Federal Employees and is free to members who go to National Active and Retired Federal Employees Association (NARFE). The registration is on the upper left hand side of the homepage. Nonmembers can join for $39.95 and that includes a one year membership in NARFE.
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