Surviving and thriving on the TSP rollercoaster

Mike Causey returns from vacation this week, but in the meantime he asked several readers, friends and even critics to write guest columns in his absence. Please enjoy today’s offering from Abraham Grungold, a federal employee and burgeoning financial coach in Florida:

Every July during my 32-year career, I eagerly waited for my annual Thrift Savings Plan statement. I reviewed my contributions and monitored how and where my account appreciated in value. Making an interfund transfer took up to four weeks once you submitted your form. Now I can log into my TSP account every day and I can make two interfund transfers each month, and they only take 24 hours to complete.

At lunch, we would discuss our levels of risk and who was more aggressive with their investment options. One coworker always kept his money in the G Fund, and since 2008 and 2009, several coworkers have moved all their funds into the G Fund anytime they felt the sky was falling.

My friend and I would look at each other and say to keep it in the C and S funds and just “let it ride!”     Our focus in the TSP was longterm growth and we knew retirement was many years ahead of us.

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My TSP strategy has always been slow and steady, to keep pouring in those contributions and not watch the stock market, which is like a rollercoaster. TSP began in 1987 and together with the stock market it has had more great years than bad ones. During the bad years I kept investing in the C and S Funds.

Government careers are like a horse race — we can’t wait to get to that retirement date finish line. As I make my final turn in that horse race, I started to hear the word of caution. The financial gurus kept saying that although the stock market continued to climb in 2017, there was a major adjustment on the horizon. In October, when the Dow Jones Industrial Average reached another all-time high of 23,300 points, I decide to move both my C Fund and my S Fund balances into the G Fund.

For the moment, I felt it was a wise and safe decision. Pull out on a high and play it safe for the next three years until I cross that finish line, my retirement date.

Six months later in April 2018, the Dow rose 14 percent to 26,600 and I felt I maybe got out too soon. No regrets, as I had my money in a safe place: the G Fund. As predicted, the Dow started heading down 17 percent to 22,000. On that downward dip I started buying into the C Fund, bringing my account balance to 100-percent C Fund.

Yes, it is a volatile economy, but I don’t plan to retire for three years. And in a slow-growth stock market, earning 4-5 percent is better than the 2 percent which the G Fund provides. Today the Dow is over 25,200 points. Once it returns to the all-time high of 26,600, a 5 percent increase, buying on the dip of the TSP rollercoaster should provide me with an additional $100,000. This level of risk is not for everyone, but for now I am going to let it ride.

If you are at the beginning of your career or even mid-point, take advantage of the potential growth that TSP offers. If you can tolerate some risk, there is the potential of great rewards.

I am an active FERS employee and I also have a part-time business as a financial coach helping active employees and retirees.

Nearly Useless Factoid

By Amelia Brust

According to the National Association of Convenience Stores, the reason credit card customers are asked for their ZIP codes at the pump is for a security measure. Someone with a stolen card would be less likely to enter the correct ZIP code and gas pumps are a common place for thieves to test that a card is still active. NACS said this was because a gas pump involves no interaction with a clerk who may confiscate the card, except perhaps in New Jersey.

Source: National Association of Convenience Stores