Introduction
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Hi… I am a retired federal worker. I was a federal worker for almost 30 years, and as such, I was enrolled in the TSP. Now in retirement, I am still enrolled in the TSP. The Thrift Savings Plan, is the US Federal government retirement savings program for Federal employees and is the largest defined contribution plan in the world with almost 7 million members.
In the beginning, I didn’t have that much saved and wasn’t too informed about the TSP choices. But over the years I tried to educate myself and maximize my returns. I settled on an approach to the TSP that I believe helps maximize returns and provides a safety net for corrections and crashes. It’s nothing particularly novel, similar strategies are used throughout investing. Here, I try to put it in the context of the TSP and write it for non-financial everyday people, like me. I wish I had had more direction in investing in the TSP when I first started out. I hope younger participants in the TSP will find this interesting and make their TSP journey a little less random and a little more data driven.
My approach
This is a simple free “Buy the Dips-Sell the Peaks” strategy in the TSP: using common stock trading indicators, written in the context of the TSP. It is for informational and educational purposes only. I will show you how to do every step of the process, including describing the specific BUY and SELL signals I use.
I am trying to convince myself that I am not trying to predict what will happen in the S&P 500 in the future by considering news or financial opinions
I try to classify significant changes or turnarounds directly in the S&P 500 (C fund) that have just occurred. Is it a real signal or not?
It uses infrequent fund transfers between the TSP G fund and the C fund depending on the intrinsic movement of the S&P500, not on daily financial news and pundits opinions. But what are the Dips and what are the Peaks? (This is not like day-trading, it is maybe on average one funds transfer every 2 to 5 months).
Background
Most Federal employees, military, postal workers and federal retirees are in the TSP. Many of them sign on when first hired. They are newbies. They don’t really know much about the TSP. They set up their TSP accounts, often by default, then forget them. That is known as set-it and forget it.
Staying in the C fund all the time is probably the most successful strategy for appreciation for most TSP participants, especially for people who want to set-it and forget it. Especially for younger people since they have time. Staying only in the G fund may give a sense of security, but it runs the risk of eroding away savings over time due to inflation.
Staying in the C fund all the time runs the risk of a big crash in the C fund later in life, when they can’t recover from it, OR worse yet, people move between funds emotionally and make the wrong moves at the wrong time, usually after the fact.
People are different. Some people don’t want to look at their finances very often, they have more important things to do, they don’t have an interest in it, they find it too random or too complicated. I get it. But for people who want to do a deeper dive or take it on as a hobby, you might find this approach interesting.
When they are first hired, what you do isn’t that important because you don’t have very much money in the TSP, but after a while, we’re talking real money. And then into retirement, a big crash can be catastrophic.
I am not a financial professional. I am a biologist. This approach is what I learned to do, taught myself over my 30 year career in the Federal Government. It’s what I do, even in retirement. It is a simple strategy for people who want to learn a little bit about market timing, take an active approach to their TSP accounts as an informed hobby rather than using a passive set-it-and-forget-it approach. People spend a lot more time on say…fantasy football, sports betting, online trivia, whatever… this could affect your financial future.
Once you learn the setup and understand the buy signal (move to C) and the sell signal (move to G), it’s pretty easy. It takes less time than watching one football game on TV per month and could have a long term positive impact on your retirement.
You don’t have to be a financial whiz to do this…I’m not. All you have to do is learn 2 patterns and the BUY and SELL signals. It’s not going to cost anything…unless at the end if you find it useful, maybe buy me a coffee, your choice.
There is a lot of info and technical stuff described below, but after you do the chart setup and begin to understand the indicators and the 2 patterns, all you have to do is look out for the BUY and SELL signals, making trades about every 2-3 months, or more, when necessary.
It is really not that complicated. It’s kind of like surfing, … floating on your board in safe water (the G fund) looking out for the next good wave and riding the wave (the C fund) until it peters out. Then doing it again. Over time you begin to get an intuitive sense of the movements of the markets. You can make these moves all through the official TSP website at no cost.
Generally, there are no Tax implications on these trades that you move between funds within the TSP, unless you withdraw funds completely from the TSP. This works equally well with traditional TSP or Roth TSP. Some people may have more complicated tax situations than others.
I believe it is more successful and actually safer/more conservative than the set-it-and-forget-/ buy-and hold approach to the TSP because it gives you a Stop-Loss strategy to protect you against S&P500 crashes and corrections.
Thank you for reading…I hope you might have a better retirement with what you have learned here.
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If you find this interesting and useful, Please consider sharing the introduction https://what-i-do-with-my-tsp.blog/what-i-do-with-my-tsp/ with coworkers, other TSP members …post it to FB groups, other social media, blogs, etc. blah, blah, blah…
Disclaimer: “This page is not affiliated with the TSP, Thrift Savings Plan, tsp.gov, frtib.gov, or any U.S. government agency or uniformed military services.”
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