We chose this benchmark portfolio because the historical average monthly stock allocation of the TSP Folio strategy is approximately 40%. The benchmark portfolio is an allocation to 40% stocks and 60% bonds, invested in TSP funds as follows: 20% C Fund, 20% I Fund, and 60% F Fund.(Note that Allocations made within the past 3 months are only shown to current subscribers). Strategy performance is tracked and verified by. Performance results before this date represent a hypothetical strategy backtest. The TSP Folio strategy was made available to subscribers on.That is less stressful and often leads to long-term success but is hard to do. A major recovery from fear of the impact of COVID-19 could have a much shorter impact than a continuing spread of the disease with a substantial death rate and a significant impact on our lifestyle and national psyche.Īdvice sometimes offered is that the most successful long-term stock market investors invest their money and don’t look at stock prices other than every year or so to rebalance their portfolios. No one knows if we are now starting a bear market that could last months or years or if there will be a quick recovery. A Sustained Bear Market or Quick Recovery? That helps avoid the sudden panic gripping your investment statement. Federal employees and retirees have an advantage over many other Americans as both the CSRS and FERS retirement systems provide for a defined pension that keeps a check coming without regard to the stock market going up or down. Hopefully, those invested in the TSP and will need money from the TSP in the near future have diversified their investments so they can avoid selling in a panic. Large daily declines are often quickly followed by a large increase in stock prices.Īn investor who sells based on negative emotions that follow a big decline may miss the recovery that often follows a short time later, although a bear market will see up and down prices inside of a longer trend. In the near future, we will likely see days with a substantial gain in stocks as stock traders pile back in when the stock sales suddenly seem excessive. Investors who continue to buy stocks when the market is down significantly can reap a sizable reward by being patient and not panicking when there is a rush to sell stocks. A person with a longer time frame is likely to make back any losses and then some as the recovery since 2009 has proved. No one really knows when the market will recover or how much further it will drop. If a person is likely to need the money they have in a stock fund in the near future, selling to cut any further losses may make sense (although truthfully, it really should not have been invested in stocks in that case anyway). Those who sell stocks at a loss lock-in in their losses when the sale occurs. Over time, the stock market has always recovered. A bear market can last for an extended time, and when that happens many investors will lose a great deal of money if they sell at the wrong time. The bear market in 2007-2009 lasted about 1.3 years and the S&P 500 went down by 50.9% during that time. A Bear Market? Lock-In Losses Now?Ī “bear market” is a sustained period of stock prices generally going down and one that is often triggered by a 20% decline from near-term highs. I also don’t know any better than the next person what the stock market is going to do now or in the future. A qualified financial advisor who looks at a person’s total financial and personal situation is a much better source for advice and guidance than asking a person who does not know you or your situation. The honest answer is that I have no idea about your personal financial situation and tolerance for risk and stock market volatility. Since publishing The Sky is Falling! Time to Sell Your TSP Stock Funds? on February 28, a few readers have asked me this type of question: “Should I sell my TSP stock funds now and put my money in the G Fund instead?” If stock prices continue to fall, as happened 20 years ago, chances are the same scenario will unfold.
In fact, the C Fund went up every year from 2009-2017 resulting in huge gains for those who kept their money in the stock funds and, presumably, kept investing despite the rising or falling stock market. Almost $1.2 billion moved out of the I fundīut, despite more drops in the market before it ended, and the amount of TSP contributions declining as the market dropped, the C Fund came back in 2009 with a return of more than 26%.More than $1 billion moved out of the C fund.Almost $3.5 billion moved into the G fund.Here is a quick summary of some of the more significant money transfers that month: In September 2008, TSP participants transferred close to $3.5 billion into the G fund.
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