TSP’s awful August surprise
Got the shakes about your nest egg? The one that's supposed to provide one-third to one-half of your total retirement income? Are you feeling a little nervous?
Got the shakes about your nest egg? The one that’s supposed to provide one-third to one-half of your total retirement income? Are you suddenly nervous in the civil service?
Is your long-time-in-recovery Thrift Savings Plan account back in the financial intensive care ward?
Sometimes in the world of investing August, not April, can be the cruelest month, even for seasoned, long-term investors.
Although retirement vehicles like the federal TSP are strategic, long-haul vehicles, many of us can’t help but check their day-to-day progress. We “make” a bundle when the market (our fund) is up, and we “lose” money when it’s not. Even we are years away from cashing out. The win-lose thing is hard to shake. Example:
On Thursday, July 31, the above-the-fold right hand lead story in The Washington Post was headlined — Same day the Financial Times top-story, also above-the-fold — was US ecomony roars back with 4% growth in the second quarter. So …
Holy Smoke, Batman! I’m gonna be the richest guy in the assisted living home. Or not …
Because a funny thing happened last Thursday, the same day that the media was touting great economic news. While that good news was being absorbed, recorded and broadcast and the media was doing cartwheels of joy about the economy, a wheel fell off the good news cart.
The very same day, Thursday, of all the pent-up or just-released good news data there was a market sell-off. It dipped, crashed or corrected, depending on your point of view. Things went from Ecstacy to Agony in a heartbeat.
The business section of the New York Post on Friday, Aug. 1, led with this story: DOW BELLY FLOP: 2014 Gains Erased On US and Global Fears..
2014 gains wiped out? All of them? Gone?
So what should you do, sell, hold or sit there like a deer in the headlights? Do you bail out of the C, S and I funds (as you may have done during the recession), or do you hang tough and keep buying at what may be “bargain” (or at least more reasonable) prices.
Financial planner Arthur Stein says the thing to remember about long-term investing, as in investing for retirement, is to think long term. ” Longer time periods are more meaningful. Funds — except for the Treasury securities G fund — were down in July, but up year-to-date, 12 months, 3, 5 and 10 years.”
After the year the stock market had (2013), “A positive return of any amount in 2014 would be icing on the cake,” Stein said.
So what should TSP contributors, big small, young and nearing retirement, be doing to protect or increase their balances? We’ll talk with Stein today at 10 a.m. on our Your Turn radio show. If you have questions or comments, you can e-mail them to me before the show, or call in on air at 202-465-3080.
VA Changes/Pension Plan Rollback
Later in the show we’ll talk with Federal Times Senior Writer Andy Medici. Topics include the VA’s new crackdown-on-executives plan, a new Defense pay plan and a bill that would rollback pension contributions for new feds.
NEARLY USELESS FACTOID:
Batman’s sidekick Robin The Boy Wonder, who premiered in Detective Comics #38 (April 1940), was created by Bob Kane, Bill Finger and Jerry Robinson.
Source: Wikipedia
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Mike Causey
Mike Causey is senior correspondent for Federal News Network and writes his daily Federal Report column on federal employees’ pay, benefits and retirement.
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