TSP Strategies- Are You in Control of the Market or are You Being Played?

What do a Las Vegas gambling trip and stock (or bond) market timing have in common? Frequently, the same thing. Most people at a casino or home watching Wall Street let their emotions rule. People that are nervous zig when they should zag. They were lost before they even got out of the starting gate.

So, how should you handle what matters most in these exciting times—your retirement nest egg, the TSP? It’s an uncertain time with issues ranging from the Ukraine war to record inflation and soaring gas costs, which are expected to deteriorate even further. Perhaps even worse! In difficult times, most federal TSP accounts are vulnerable. Remember that it might provide anything from one-third to one-half of your retirement funds. And the greater the sum and the later you begin spending it, the better.

The 100,000-plus TSP millionaires (as of December 20, 2021) shared a few characteristics.

Except for a few politicians, political appointees, and federal judges, the vast majority were not already millionaires.

Most invested in the TSP stock funds regularly for an average of under 30 years, particularly during difficult times (2008-2009) when the markets were down. As it turned out, market timers sold low, while steady-as-she-goes investors acquired equities at low prices.

When things are going well, many investors know what to do. The fight-or-flight response occurs when things go wrong, which they frequently do in times like these. So we’ve asked a few financial planners what they’re advising their active and retired clients these days.

Here’s what they said.

The TSP has a double-down dose.

Except for G, the value of all TSP funds fluctuates. That includes both down and up. And, except for G, the stock and bond funds both fell in the last quarter.

How bad did it get? The first-quarter returns for the five traditional funds are explained here.

First of all, all L Funds, including L Income, fell in the first quarter.

According to the Wall Street Journal, on April 1, 2022, bond markets fell at a rate not witnessed in over 40 years, while equities had their worst quarter in two years. Among the reasons are:

• The Federal Reserve raising interest rates,
• inflation skyrocketing to its highest level in forty years,
• Russia’s invasion of Ukraine, and
• a downturn in the Chinese economy.

During the first week of April, both the bond and stock markets continued to fall.

So, that’s unsettling. However, what does it mean for TSP participants?

It indicates that participants must focus on longer-term returns for funds needed in five years or later. However, past performance is no guarantee of future results, long-term returns for US stock funds strongly outpaced bonds and overseas equities.

Employees not nearing retirement should be aware of two investment risks: volatility and market drops. However, the drops provide an opportunity to “buy low” with bi-weekly contributions.

Retirees supplementing their Annuity and Social Security benefits with TSP withdrawals should aim to withdraw from their G Fund holdings until the other funds recover. Unfortunately, participants in the TSP cannot withdraw from only one of the funds they’re currently invested in. Withdrawals are made from each of the funds in proportion to the participant’s current allocation. If you have 50% in G and 50% in C, half of your withdrawal will come from G and half from C.

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For over 13 years, Jason Anderson has served as a Personal Financial Advisor, Estate and Retirement Planner, helping to educate individuals from all walks of life and income levels on wise money investment and planning for a comfortable lifestyle and retirement.

Over time, Jason Anderson has become the ‘Go-To’ leading authority on personal financial advising, financial planning, and analysis, as well as retirement planning and financial planning for SMALL BUSINESS OWNERS. He also provides HIGHLY Popular financial education seminars for groups. These financial seminars empower people to more effectively budget, plan, manage their money, and achieve their personal financial goals. As a result of the excellent results, praise, and feedback that their financial seminars have received, the City of Los Angeles, The AFL-CIO union groups, as well as several other organizations, have decided to partner with Jason to more effectively accomplish their mission. He was also honored to be showcased in the November 2014 issue of Forbes Magazine “Americas Financial Leaders” and has been dubbed by the media as ‘The Financial Educator.’

Jason is passionate about the work he does because it brings him joy to help his financial planning and advising clients reach their financial goals. He finds excitement in assisting families in saving and paying for their children’s college education without stress, thanks to the financial plans he designs for them. He also takes pride in witnessing clients reach retirement and enjoy it precisely the way they desire.

Personally, Jason finds joy in being a husband and father of two wonderful children. In his spare time, he enjoys traveling, sports, hiking, and reading.

He works with Employees, Business Professionals, Business Owners, and ‘High Net Worth’ People.

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