Welcome to TSP Strategies

Welcome to TSPstrategies.com! This Web site is dedicated to exploring the benefits of saving and investing in the Thrift Savings Plan.

The companion book, TSP Investing Strategies: Building Wealth While Working for Uncle Sam, lays out a simple set of strategies for long-term, buy-and-hold investors to consider while investing in the TSP. This Web site and accompanying blog will build on those concepts, while focusing on new investing options and developments related to the TSP.

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Monthly Archives: April 2012

Apr


30

Debt and the TSP

When using strategies to build wealth, personal debt and the Thrift Savings Plan go hand-in-hand.  That is to say that personal debt can act as a significant barrier to building wealth, while the TSP offers a powerful means to build up wealth over time.  Ultimately, the less debt a person has – the fewer payments a TSP investor must budget for each month – the more he or she can put toward the TSP and other wealth-building contributions and toward … more

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Apr


29

Sell in May and Go Away, part 2

After charting the C Fund before and after May as part of an investigation into the investing adage “sell in May and go away,” I also charted the S Fund and I Fund before and after May to compare how they performed most recently in 2006-2011. Overall, the S and F Funds appeared to perform similarly to the C Fund, although in most years they began to decline either several weeks before or after the C Fund.  They also fluctuated … more

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Apr


23

Sell in May and Go Away?

There is an old investing adage to “sell in May and go away” – suggesting that stock markets do well in the first part of the year according to this saying, while they sometimes swoon in the summer months through August and September. Two academics – Ben Jacobsen of the New Zealand Institute of Advanced Study and Sven Bouman of Saemor Capitol – studied the phenomenon in their 2001 article “Halloween Indicator, ‘Sell in May and Go Away’.”  The authors … more

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Apr


19

Would DoD Ever Match Service Members’ TSP Contributions?

In February 2010, the Office of the Secretary of Defense issued a “Report to the Congress” titled Cost and Impact on Recruiting and Retention of Providing Thrift Savings Plan Matching Contributions.  The report was a little-noticed product of the June 2009 Thrift Savings Plan Enhancement Act, which empowered TSP administrators to establish a Roth TSP and separately called for the consideration of a TSP “mutual fund window”. A provision in the 2009 Act also included a “Sense of Congress” stating … more

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Apr


18

TSP Funds Surpass $300 Billion in Assets

According to January 2012 statistics, the Thrift Savings Plan exceeded $300 billion in assets, coming to a little over $302,142,000,000 at the end of the month.  The amount was a combination of TSP participants’ contributions and growth in the various funds. With 4,538,000 participants, that works out to an average of $66,580 per TSP account holder.  Of course, with one participant having over $4 million in his or her TSP account, and with hundreds of others with over $1,000,000, not … more

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Apr


17

Tax Refund Options

Midnight of 17 April, the tax deadline, is fast approaching.  The question now becomes (for those who will receive one) what should we do with our tax refunds? Kiplinger’s recently provided 10 suggestions for what to do with your tax refund.  The financial site gave some general advice, starting with “pay off credit card debt,” boost your IRA savings, and “build your college savings fund,” among others. Each is a good option – I particularly like paying off debt of … more

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Apr


14

More on TSP Fund Returns

I’d like to take the opportunity to further highlight the underlying figures cited in my posting on TSP returns from 1988 to early 2012, the 25-year anniversary of the TSP. The total personal contributions by the hypothetical TSP investor in this posting was $42,393, which with the automatic government contribution brings her total investments over 25 years to $84,786.  Also, over half of her contributions – $23,601 – came in the last 10 years of this 25-year time span, because … more

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Apr


11

TSP Administrators Announce Implementation Date for Roth TSP

TSP administrators announced that the implementation date for the Roth TSP will be May 7, when government “agencies and services can begin accepting elections for Roth (after-tax) contributions at that time.”  The updated TSP Election Forms were a clue that the implementation date would come in May. Note that not all government offices are ready to implement the Roth TSP option.  According to the press release, TSP administrators are “aware that not all agencies or services have completed the technical … more

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Apr


11

After the Roth TSP, a ‘Mutual Fund Window’?

While the Roth TSP has received the lion’s share of attention since the June 2009 enactment of the “Thrift Savings Plan Enhancement Act,” the legislation also empowered the Federal Retirement Thrift Investment Board (FRTIB) to allow a “mutual fund window” if “the Board determines that such addition would be in the best interests of participants.” A mutual fund window would allow TSP participants to invest some of their contributions in mutual funds outside the ten already offered in the TSP.  … more

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Apr


10

NFCC Surveys Financial Literacy

A survey sponsored by the National Foundation for Credit Counseling found that many adults in the past two years (42% 2012, 41% 2011) gave themselves a grade of C, D, or F on their knowledge of personal finance, marking a statistically significant change from 2010, when as many as nearly 2 in 3 adults (65%) gave themselves an A or B. The survey found that 4 in 5 adults (80%) – a greater proportion than in 2011 (76%) – said they … more

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Apr


09

Who Says ‘No’ To Free Money?

Apparently, 6,697 new FERS employees said ‘no’ to free money in 2011.  That’s the number who opted out of the Thrift Savings Plan automatic enrollment when they were first hired and declined to participate in the TSP, according to FRTIB figures. As of August 2010, new federal employees hired in the Federal Employee Retirement System (FERS) are automatically enrolled in the TSP at 3% of their salary.  They can maintain that contribution amount, increase it upon being hired (or any … more

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Apr


09

Who Contributes More to the TSP: Army, Air Force, Navy, or Marines?

The Thrift Savings Plan was opened to members of the uniformed services ten years ago.  Military personnel were allowed to participate in the TSP for the first time beginning in January 2002 with a 2001 amendment to the National Defense Authorization Act for Fiscal Year 2000. Ten years later, which service has the highest participation rate? As of the end of December 2011, the numbers broke out this way:  Among active duty personnel, the Navy had the highest participation rate, … more

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Apr


05

TSP Fund Returns, 1988-2012

The following charts show the approximate returns for the G, F, and C Funds since early 1988.  While the G Fund began taking contributions in April 1987, when the TSP first opened, the F and C Funds did not open until January the following year. The returns are based on an investor starting as a GS-07 in 1988, contributing 5% of her salary and receiving a 5% government matching contribution.  The investor enjoys periodic promotions, so that her pay rises … more

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Apr


03

April is Financial Literacy Month

It seems fitting that “Financial Literacy Month” happens to coincide with the anniversary of the creation of the Thrift Savings Plan, which started taking contributions on April 1, 1987. TSP administrators just released the poster for this year’s Financial Literacy Month, below.  As you can see, this year’s major theme is the new “Roth TSP” option that is expected to be launched shortly.

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Apr


02

Happy 25th Birthday, TSP!

On April 1, 1987, the Thrift Savings Plan became operational and approximately 600,000 individual accounts were opened for employees who began Federal Government service after January 1, 1984.  The TSP was created as part of “Federal Employee Retirement System Act” (FERS Act), signed by President Reagan on June 6, 1986 to reform the federal employee retirement benefit system.  While federal employees faced a reduced pension under this new system, they became eligible for Social Security and also received government matching … more

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