Piece-of-cake advice for million-dollar nest egg: Just buy low and sell high!

When the current recession hit (2007) and people became aware of the financial crisis/housing market nosedive, etc., a lot of investors had visions of their Thrift Savings Plan nest eggs getting fried. Some panicked and pushed the bail-out button.

As the stock market tanked, many feds who had grown accustomed to double-digit returns on their TSP stock investments during the 1990s suddenly saw there can be a downside too. The “irrational exuberance” some experts warned us about turned out to be true.

Many investors who were near (or thought they were near) retirement pulled out of the higher risk C, S and I stock funds and put everything in the super-safe, never-has-a-bad-day G Fund.

The C Fund is invested in the nation’s 500 largest publicly traded companies, the S Fund covers most of the rest of the U.S. stock market and the I Fund invests in international stocks.


The stock funds are much more volatile than the F Fund (bonds) and the G Fund (Treasury securities). But when they do well, they give investors a lot more bang (as in gain) for their buck. The keyword is “when,” as in when they do it, and when they stop doing it.

Some people try to time the market, guessing (based on their research) when the markets will peak and when they will bottom out. The idea is to buy low and sell high. It is a lot easier said than done.

Many financial planners point out that when individuals try to time the market, they must be right two times in a row. They must know when the market is at or near rock bottom (so they can buy low) and when it has peaked (and about to go down) so they can sell high. One equated market timing to jumping from one ship to another ship while both are rolling and pitching because of high waves and wind.

The TSP is doing well. Especially the stock funds. The C Fund was up 16 percent, the S Fund was up 18 percent and the I Fund was up almost 19 percent for all of 2012. Does that mean happy days are here again? (2012 was also a very good year). Or does the nation’s unsolved financial problems mean it’s going to be a rough up-and-down year? The YTD returns for the G Fund and the F Fund are 1.47 percent and 4.2 percent respectively. Safe, but…

Did people who jumped out of the TSP’s stock funds several years ago do the smart thing? Or should they have stayed the course and continued to buy shares while they were available at sale prices?

Today at 10 a.m. on our Your Turn radio show, my lead-off guest is financial planner Arthur Stein. He’s a close watcher of the TSP and we’ll talk about what feds and retirees should — and should not — be doing with their accounts. Does the TSP need more investment diversity — like a gold fund, REITs or green funds — or is the current mix good enough?

Later in the show we’ll be joined by Federal Times reporters Stephen Losey and Sean Reilly. They’ll talk about the possibility of a government shutdown and employee furloughs, the last-minute congressional decision to do nothing, the retirement “tsunami’ and why they think the government’s flex-schedule program has flopped.


By Jack Moore

Philadelphia residents purchased more sweatpants in 2012 than any other American city, according to a survey conducted by Experian Marketing. It’s the second year in a row the City of Brotherly Love has taken home the (dubious?) honor.

(Source: New York Daily News)


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