To get an answer to this question, we contacted Abraham Grungold. He is a successful TSP investor and a financial coach known for his thoughts and fantastic words of wisdom. He answered this question and said, “For employees under the Federal Employees Retirement System (FERS), it is the best time to buy.”
The ongoing COVID-19 pandemic is scary. People are losing their lives, and that should not be treated lightly. Everyone needs to stay cautious with his or her personal and financial health. This many end in the coming weeks or in months. The economic health crisis has undoubtedly taken everyone on the chin. Everyone feels knocked down, but we will return and become sharper after the outbreak is over. As far as employees under the FERS system are concerned, employees who have a Thrift Savings Plan will buy in a downward market. It doesn’t matter if you are one year away from retirement or more, it’s a perfect buying opportunity. Grungold said he has transferred his cash balances to the C fund and changed his future contributions to buying C fund as well. For his personal IRA, he is purchasing every time the Dow drops another 10%, buying when the market is low 10%, 20%, and then at 30%.
At his financial coaching site, he has both clients who are federal employees and non-federal employees. His advice is not to sell anything to all clients because you don’t lose anything when you don’t do anything. There are clients he had told that when the Dow dropped to 30%, it is the time to buy. The financial expert’s advice is to buy when the market is low. One of the federal employee clients transferred 50% of his account into the C fund. Another employee, who has both C and F funds, was advised to increase his contributions to the maximum since he could afford to do so.
I also have two non-FERS clients — one purchased a considerable amount in an S&P 500 fund with Vanguard, and the other is waiting to see a drop in the S&P fund. It’s advised to invest in small quantities, and when the market is low, 20-30% of any purchase is a good option. For many non-fed clients who don’t have much cash, Grungold suggested high-quality value stocks going down 25-30% but would come up quickly after the virus dwindles.
“No matter what type of decision you take on, the most important thing is that you feel good and comfortable with whatever you are doing. The money is yours, so the decision to invest it should rest in your hands only.”