Not so long ago in what now looks like the good old days hundreds of Thrift Savings Plan account holders were hoping to be inducted into the Millionaires Club. A few believed that by mid-year they will have accounts worth more than $2 million.

That seems like a long time ago now. So the question for all feds who are partially financing their own retirement is what next?

During the Great Recession in 2008-2009, thousands of active and retired folks bailed out of the stock indexed C, S and I funds. Most went into the treasury securities G fund. Many never went back to stocks even during the 11-year bull market. So who did the right thing? And exactly what was the right thing then, and now?

I contacted Abraham Grungold a successful TSP investor who also has a financial coaching business for his thoughts and some words of wisdom. What he said was this: For Federal Employees Retirement System participants, it’s a time to buy:

“The COVID-19 pandemic is tragic. People are dying and we should not treat it lightly. We need to be cautious with our health and our financial health. The end may come in weeks or in months. The economic markets have certainly taken one on the chin. We are knocked down, but we will certainly stand up and come back swinging. But as a FERS employee who has a Thrift Savings Plan, I see it as an opportunity to buy in a downward market. Whether you are one year away from retirement or 30 years from retirement it is a buying opportunity.

“Personally, I have reallocated my cash balances to the C fund and I have changed my future contributions to purchasing in the C fund. For my personal IRA I have been buying every time the DOW dropped another 10%, buying when the market was down 10%, 20% and then at 30%.

“In my financial coaching business, I have both fed and non-fed clients. To all my clients, I say that it is not wise to sell anything. You do not lose anything by doing nothing. There is no recognized loss if you are simply watching. But I have clients that I have told that when the DOW dropped to 30%. It is an excellent time to buy something. The financial experts say buy on the dip. Well 30% is a significant drop. One FERS client reallocated 50% of their account in the C fund. Since this person retired, it was wise that 50% was enough. Another client who is a fed was in both the C and F funds. I suggested that during their open season increase your contributions to the maximum allowed since he could well afford to do so.

“I have two non-FERS clients — one purchased a significant amount in a S&P 500 Fund with Vanguard and the other client is waiting to see if the S&P will drop down even further. It is best to buy in small quantities and in a decreased market that is 20%-30% any purchase is a winning situation. For several other non-fed clients who had small amounts of available cash, I found them high quality value stocks that were down 25%-30% but they are expected to will quickly bounce back after the virus has left us.

“But the most important thing I always tell my clients is to do what you feel comfortable with, it is your money, it is your decision. Any questions or comments please contact me on LinkedIn or my Facebook page.”

Nearly Useless Factoid

By Amelia Brust

Author Patricia Highsmith, who wrote such books as “Strangers on a Train” and “The Talented Mr. Ripley,” kept hundreds of snails as pets and would even take them in her handbag to parties where they clung to a head of lettuce.

Source: The New Yorker

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