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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Category: TSP Strategies

Feb


21

Sequestration and TSP Contributions

The Department of Defense (DoD) formally announced plans to furlough a majority of its civilian employees as part of the spending cuts necessitated by sequestration. The Secretary of Defense sent the following message to the workforce yesterday, saying that he had officially starting the furlough process by notifying Congress as required by law: “Today, I notified Congress that furloughs could occur under sequestration.  I can assure you that, if we have to implement furloughs, all affected employees will be provided … more

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Jan


29

Back To Basics

While it is easy to get excited about the positive performance of the TSP stock funds and lifecycle funds of late, other issues such as sequestration and the end of the current continuing budget resolution are just weeks away. Sequestration is due to take effect at the beginning of March.  On Sunday, the chairman of the House of Representatives Budget Committee said he thought “the sequester is going to happen.”  Readers of this forum know first-hand how agencies are scrambling … more

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Oct


14

For Open Season, Do You Prefer an FSA or HSA?

While open season for CFC began in September, open season for health care begins next month on November 12th. Among the options for paying eligible health care expenses for the coming year, you can plan to pay by using either a Flexible Spending Account or by using a Health Savings Account.  Both use pre-tax dollars to pay for medical expenses and thus save your family money, but they differ in several significant ways. The Flexible Spending Account (FSA) was created … more

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Sep


23

Markets and the Presidential Election Year Cycle

Ever noticed how many of the memorable market declines have taken place in September or October?  The great crash of 1929 began as a slow slide in September, and in mid-October the crash hit in earnest.  By mid-November the U.S. stock market had fallen by almost half. On October 19, 1987, the S&P 500 fell over 20% in one day.  2002 began with the S&P 500 at over 1,165, but it fell to 785 on October 7 before recovering some … more

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Sep


17

The Pulp Fiction Fed And Your TSP

One of my favorite films is “Pulp Fiction.”  The Quentin Tarantino movie resurrected John Travolta’s career and further elevated the career of the young Uma Thurman. In one major plot line, hitman Vincent Vega – John Travolta – is charged with entertaining the wife of his mob boss while he is out of town. The wife, Mia Wallace (Uma Thurman), is easily bored and flirtatious, an obviously dangerous combination in a mob family.  Having heard the rumors of what happened … more

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Aug


28

The Most Popular TSP Funds

Ever wonder where your fellow TSP investors are placing their money?   While it is impossible to know in which funds individual TSP investors place their money, it is possible to find the aggregate amounts going into each fund for all investors as a whole.  These statistics are also broken down by category, for example by FERS, CSRS, and members of the uniformed services.  All of this is provided courtesy of the Federal Retirement Thrift Investment Board (FRTIB). It may not … more

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Aug


15

Bogle on the Future Returns of the F Fund

Jack Bogle is a legend in the personal investment world.  He was the first to popularize low-cost index funds in the 1970s.  While academics had shown the theoretical returns of index funds compared to actively managed funds, individual investors had no ability to invest in an index fund.  Bogle, the founder of the mutual fund company Vanguard, proposed the first S&P 500 index fund for individual investors in 1975, and the fund began accepting investments on August 31, 1976 as … more

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Jul


30

The G Fund and the C Fund

The G Fund and the C Fund are the basic building blocks of any TSP portfolio.  Each has its strengths, and each faces challenges particularly in these difficult economic times.  But they complement each other in ways that can provide a more stable total TSP investment than investing in either on its own. The G Fund is a stable value fund made up of special U.S. government securities issued to the TSP.  The fund calculates rates based on a weighted … more

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Jul


16

With Record-Low Annuity Rates, Now What?

Annuity rates are at a rock-bottom 1.875% for TSP investors who choose to purchase an annuity with MetLife, the Thrift Savings Plan’s sole contracted annuity provider.  And chances are, the annuity rate will fall yet again in the coming month or two, since rates for U.S. treasury bonds continue to fall.  The interest rate on the 10-year treasury bond dropped to below 1.45% today before recovering slightly to 1.464%, which represents a new closing low for the U.S. bond. This … more

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Jun


12

Rising Dividends Lift All Boats

In a previous post I calculated the return of an investment of $1,000 yearly over the past 40 years.  This would correspond to a person working from age 22 to 62, for example, or for those with foresight, a person investing from the age of 12 to 52 (parents, show this to your kids even if they will never pursue a career in government or in the military).  And these are real, actual returns, not an “average” of the returns … more

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Jun


06

TSP Annuity Rates: How Low Will They Go?

Thrift Savings Plan administrators recently announced that the interest rate for annuities purchased in June will be 2.125%.  This interest rate is unchanged since February, when it dropped from 2.150%.  This is an astoundingly low interest rate for an annuity, and it is a result of incredibly low interest rates since 2008. These rates appear to be headed even lower in the coming months.  With the continuing political turmoil in Europe and precarious debt burdens throughout the developed world, yield … more

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May


19

Taking Advantage of ‘Sell in May’ Effect

The TSP large-cap stock funds – the C and I Funds – have dropped for 11 of the past 13 trading days, while the small-cap stock fund, the S Fund, has dropped for 10 of the past 13 trading days.  While the C Fund is down about 8.5% from its April 2 high of $17.62, the S Fund is down over 10% from its March 26 high of $23.79, and the I Fund is down almost 13% from its high … more

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May


08

TSP Now Allows Roth TSP Contributions…for Some

Many federal government agencies began taking requests from employees to switch their future contributions to Roth TSP accounts this week. Unfortunately, some TSP participants – especially those in defense-related work – have to wait until as late as October to begin Roth TSP.  The Defense Finance and Accounting Service announced on April 13 that Defense employees would have to wait until October in some cases to switch their personal contributions to the Roth TSP.  The DFAS announcement came a day … more

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May


04

DRIPs and the TSP

There are of course a variety of investment vehicles outside of the Thrift Savings Plan.  One seemingly simple option is investing in individual companies through what are called “Dividend Reinvestment Plans,” or DRIPs.  As the name implies, a large majority of companies that offer this investment option pay out dividends periodically, which are then automatically reinvested through the plan into more stock of that company.  An investor can find the company or companies he or she likes through services such as … more

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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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