If it’s fun, it must be wrong

If you think about it all the time, if it’s an emotional high sometimes, you may have a problem.

If on the other hand…

If it’s deadly dull, and it’s been months since you’ve even thought about it, there’s a good chance you are on the right track.

We refer, of course, to investing for retirement. Any resemblance to your romantic life is purely coincidental.


Many professional financial planners (unless they sell mutual funds or charge management or transfer fees) suggest that people pick a strategy and stick with it. They say if you get emotional about something like your Thrift Savings Plan, you may be making a big mistake.

Several that I’ve talked with, including Vanguard founder John Bogle and CBS MoneyWatch columnist Allan Roth, say you should make a plan and stick with it, regardless of market highs and lows. Both say they would love to get into the federal TSP. “Make me a dollar-a-year federal worker and I’m in the TSP,” says Roth.

What both counsel is that investing should be dull, not exciting. “If you get excited and are having fun [investing], you are probably doing the wrong thing,” says Roth. He noted that before and during the shutdown, a lot of TSP investors bailed out of the stock-indexed C, S and I funds and moved into the super-safe Treasury securities G Fund. The problem with that is that the markets didn’t tank — in fact they reached record high levels this week — so people would have “made” money had they stayed put.

Roth was our guest yesterday on our Your Turn radio show. He was talking about the people who left the TSP’s stock-index funds (to the tune of $2 billion dollars) during the shutdown. They anticipated that the markets would go crazy and they wanted the safety of the treasury securities G-fund. As it turned out the markets soared.

Here’s some of the reaction from readers who tried it both ways. They were reacting to yesterday’s column.

Frank in D.C. Says:

  • ” …The debt ceiling debacle of August 2011 that was caused by Congress, caused me to lose in a couple days what took many, many months to save. So, I escaped to the G fund and because of that, I’ve missed ALL of the market gains of the past two years. I squarely blame Congress. How can a person depend on the stock market as a retirement plan? I don’t think it’s a sound plan at all. — Signed, Once Bitten, Twice Shy
  • “I’m an ex-fed retiree with most of my savings still in my TSP account. Going into September, I had my money split in three different Lifecycle Funds. I read the last time the Congress played with fire, the market dropped 17 percent, so for the first time ever I abandoned my ‘hold and wait’ long term outlook and parked all my funds in the ultra-safe G F account about Sept 20. Soon after, I went on vacation and by time I realized the market was not going to cooperate I was in the Amazon jungle and did not have safe access to the Internet. As soon as I returned, I put my money back in the funds I had taken them from. Although I technically did not lose a penny, the shares I bought back were up enough that had I continued to ‘hold and wait,’ I would be $12,000 richer today. As they say: Que sera sera.” — Barry
  • “You’re implying those who sold C Fund shares for the super safe G Fund shares were not wise because the stock market is hitting records highs. Actually for me, I didn’t sell my C Fund shares because of the shutdown. I sold because the C Fund shares were selling for $21.77 and the G Fund was selling for $14.21. Some of those C Fund shares were purchased for under $9 per share. That means for every 2 shares of C Fund stock I sold, I received 3 G Fund shares. In addition, there will be a downturn eventually, so why should I get caught flatfooted. I would argue that now is the time to sell C Fund stock, not buy it!” Barry in Birmingham


Compiled by Jack Moore

Apologizing for things outside your control — known as a superfluous apology — makes you more trustworthy, according to research from the Harvard Business School. In the study, when a man approached strangers at a train station on a rainy day and said, “I’m so sorry about the rain! Can I borrow your phone?” he was 38 percent more successful in using the strangers’ phone than if he only asked to borrow the phone.

(Source: Harvard Business Review)


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