TSP tip: Time in the market vs. market timing

Most of the Thrift Savings Plan’s 10,000-plus millionaires did it the old-fashioned way. They maxed out their contributions from day one and stuck with the stock funds — the C and S funds, which cover the U.S. stock market — through good times and bad.

Instead of heading for the “safety” of the Treasury securities G fund, they continued to invest in the stock funds when they were down. And on sale. They bought low and now the market is at record levels.

Many of the 35,000 TSP’s second tier of investors — feds and retirees with $750,000 to $999,000 accounts — are likely to become millionaires this year. But most experts say the market is long overdue for correction though not, they hope, of the 2009 Great Recession variety.

When that happens, will you stick with the market and keep buying the stock funds or will you do like many did and move into the G fund? And stay there even when/if the markets recover?

Emotion is a big problem for investors, according to Allan S. Roth, a financial columnist for AARP magazine, The Wall Street Journal and ETF.com. Roth’s motto is dare-to-be-dull. He says emotion makes people do things — like selling low and buying high — they shouldn’t when building a retirement nest egg.

His book, How A Second Grader Beats Wall Street, tells how his then 8-year old son built his own portfolio that beat the pros.

One of the main reasons, Roth says, is that money meant very little to his son when he started investing. It was more an 8-year old’s academic exercise. Because the money ($$$) meant little, he invested without emotion.

When the market peaked or bottomed out, he watched cartoons, played games and did what other 8-year-olds do. But he didn’t panic. Could it work for you? Should you try it?

Today at 10 a.m., on our Your Turn radio show, Roth will talk about his dare-to-be dull method of investing.

He’ll review the 13 lessons in his book, talk about time in the market as opposed to timing the market, what place the G fund should have in your portfolio and how taxes figure in the allocation of stocks, bonds (the F fund) and the G fund in our TSP and outside investments.

Roth can contacted by clicking here.

Nearly Useless Factoid

By Michael O’Connell

American billiard balls measure 2 1/4 inches in diameter.

Source:  Gamerisms

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Dec 06, 2021 Close Change YTD*
L Income 23.2749 0.0534 4.32%
L 2025 12.0495 0.0532 7.70%
L 2030 42.6371 0.2567 9.58%
L 2035 12.8165 0.0845 10.38%
L 2040 48.5420 0.3486 11.19%
L 2045 13.3063 0.1023 11.85%
L 2050 29.1714 0.2393 12.55%
L 2055 14.3728 0.1467 15.21%
L 2060 14.3727 0.1466 15.21%
L 2065 14.3726 0.1466 15.20%
G Fund 16.7198 0.0021 1.26%
F Fund 20.9605 -0.0656 -1.14%
C Fund 69.2546 0.8053 23.16%
S Fund 81.8771 1.173 11.80%
I Fund 37.9805 0.2575 6.04%
Closing price updated at approx 6pm ET each business day. More at tsp.gov
* YTD data is updated on the last day of the month.