Why I believe this is a conservative approach and safer that the common set-it-and-forget-it approach.

When you first sign on to the TSP you are generally earlier in your career and you don’t know much about the TSP and probably the stock market. It isn’t that important because you don’t have much in the TSP and you have a lot of time.

Quite often new TSP enrollees use a set-it-and -forget-it approach to the TSP. They allocate the TSP contribution into a particular fund or a couple of funds and forget about it. They have more important things to do.

The problem is if you are in the G fund, it doesn’t keep up with inflation. The real long term gains are in the C fund (or the S, I or any stock based funds). See why I don’t like the L funds.

But if you are in the C fund, you are subject to periodic corrections, or worse, rare crashes. If these happen as you get nearer to retirement. there may be less time to recover. At the end of your career, or in retirement, you need some sense of what to do if the stock market crashes. YOU NEED A STOP LOSS STRATEGY (I apologize for the all caps). But it’s true. This approach offers a rational (and of course free) Stop/Loss strategy.

You also need to know how, and be comfortable with moving large amounts of savings between your accounts, so you will be ready to pull the trigger when you have to. Now in retirement I move >1M with every trade, every 4-5 months or so.

So, I believe I should be in the C fund when the stock market has a higher likelihood of going up, and in the G fund when the stock market is in a drop. Easier said than done.

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