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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Tag Archives: Long-Term Investing

Aug


22

Market Fundamentals as ‘Market Timing’?

There was an excellent article in the back pages of today’s Wall Street Journal titled “Yes, You Can Time the Market.” It detailed a method of determining when market fundamentals are too frothy, and how to re-adjust one’s stock holdings versus bond holdings.  The author focuses on the Shiller P/E ratio for the S&P 500, which currently stands at a rather high 26.31. For comparison’s sake, right before “Black Tuesday” in 1929, the ratio stood at 30, while during the … more

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Aug


19

‘Tick Tock Tick Tock That’s the Sound of Baby’s Clock…’

My young son loves to be read “Baby Listens,” written by Esther Wilkin in 1960.  It’s a “Little Golden Book Classic” edition now.  It’s very lyrical. The first main page of the story shows a baby entranced by an old alarm clock.  “Tick tock tick tock, that’s the sound of baby’s clock…” goes the book. That’s what immediately came to mind when I read the annual Board of Trustees’ Report on Social Security and Medicare, and the CBO’s latest long-term … more

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Jul


23

C Fund Millionaires

The C Fund has recently produced a lot of millionaire TSP participants. Those TSP participants who started investing in the C Fund at its inception in 1988 have become or are close to becoming millionaires this year. Those who contributed enough from pay that, together with the government match, was the equivalent of the maximum deferral limit each year are now millionaires: In 1988, the deferral limit was just over $7,300, and by 2000 that limit had grown to  $10,500. … more

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Jun


24

The Unintended Consequence of Higher FERS-FRAE Payments

Did you experience a 3.6% pay cut this year? Those who just began their civilian federal government service this year did, probably without even knowing it. You’ll recall that lawmakers mandated an increase in contribution rates from new employees’ salaries to pay into the FERS retirement system. The new revised retirement system – “FERS-FRAE” or “FERS Further Revised Annuity Employee” – now requires a payment of 4.4% of new employees’ salaries into the system.  The 3.6% figure represents the difference … more

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Mar


03

TSP Diversification the Warren Buffett Way, and Alternatives

Warren Buffett, of course, is known for his investments in and purchases of individual companies.  His Berkshire Hathaway holding company owns over 80 businesses outright and has substantial investments in the stocks of over 100 others.  As the company’s largest shareholder, he is also ranked fourth on Forbes’ list of billionaires.  He didn’t build his wealth by investing in index funds, but amazingly enough, he suggests that you and I should consider doing so. His Berkshire Hathaway annual letter to … more

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Aug


24

Ready To Live to 100? Vanguard Thinks We Should Be

Vanguard, the mutual fund company founded by Jack Bogle, earlier this month published an interview on longevity with two retirement experts.  Titled “Ready to live to 100? Here’s why you should be,” the participants discussed the positive and negative aspects of longevity, the need for a “culture of saving,” and the risks of outliving one’s life savings. In one interesting exchange, one of the experts notes that many people “assume that Social Security and Medicare will continue as they are, … more

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Jul


05

20-Something Feds Act Downright Old

A recent study of TSP participant behavior found the age group allocating one of the largest amounts to the G Fund is…20-somethings.  As a group, 20-somethings had almost 45% of their of their TSP funds allocated to the G Fund. Only 60-somethings and 70-somethings allocated more to the G Fund, at about 50% and 55% respectively.  This is according to a demographic study of TSP participant behavior from 2006 to 2010 (see slide 18). The G Fund may be the least … more

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Jun


18

How To Avoid Investment Scams – a Convicted Felon Comes Clean

Bernie Madoff perpetrated one of the largest Ponzi schemes in history, with losses totaling between $50 and $65 billion.  He was convicted in 2009 and sentenced to 150 years in prison. In a recent interview from prison, Madoff shared how not to be taken in by a Ponzi scheme.  When asked where investors should put their money “with the least amount of risk for fraud,” Madoff answered: “The best chance for the average investor is to put money in an … more

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Apr


21

Et Tu, Brute? The Very Real Legislative Challenges to Tax-Preferred Treatment of TSP Accounts

A budget proposal earlier this month raised the possibility of limiting the total amount that can be saved in TSP accounts, along with other tax-preferred accounts such as Individual Retirement Accounts (IRAs) and Health Savings Accounts (HSAs). One of the original, guiding principles of tax-preferred accounts such as the TSP (and including others such as 401(k)s, 403(b)s, and IRAs) is that workers should have the ability to save and invest some of their wages in ways in which wages are … more

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Mar


16

The TSP and Facebook

Interested in investing some of your TSP savings in Facebook?  Or would you rather avoid it like the plague? In either case, take a look at the S Fund.  Facebook is the sixth-largest holding in the S Fund as of February 28th.  The S Fund is based on the U.S. Completion Total Stock Market Index, and as the name suggests, the publicly traded companies in the U.S. (like Facebook) that are not included in the C Fund – which is … more

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Mar


11

The Wisdom of TSP Crowds

When it comes to asset allocation among the TSP funds, it is interesting to take a look at where others are putting their money in aggregate. According to official statistics, the TSP reached $330 billion in total assets at the end of 2012, which was 10% higher than in January when the TSP first surpassed $300 billion in assets.  This growth includes additional contributions through the year (participants contributed a net total of around $12 billion in 2012), and the … more

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Mar


10

Maybe 150 Isn’t So Far-Fetched After All…

According to the UK’s Mail Online, “Drugs that could combat ageing and help people to live to 150-years-old may be available within five years.”  Read the full article here. Maybe living to 150 in our lifetimes isn’t so far-fetched after all…!

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Feb


28

If 72 is the New 30, Is 150 the New 70?

Demographers comparing the lifespans of hunter-gatherers to lifespans in the modern era recently reported that the average 30-year-old hunter-gatherer had about the same odds of dying as a Swedish or Japanese man faces at age 72. Media promptly declared that “72 is the new 30,” and posted pictures of famous septuagenarians such as Chuck Norris, Al Pacino, and Raquel Welch – all extremely healthy and active.   The reports hinted at the enticing prospect of living much longer than we currently … more

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Feb


23

C Fund Parties Like It’s 1999

The TSP stock funds have been on a tear recently, rising on average between 7% and 11% over the past three months. Another development, however, points to the underlying strength of the companies that make up the S&P 500 and the C Fund.  S&P Dow Jones Indices – the group that oversees the S&P 500 index – noted that the number of companies that have been paying out dividends has steadily risen since the recession.  By the end of 2012, … more

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Feb


10

Will the Year of the Snake Bite the TSP?

Happy (Chinese) New Year!  On February 10th, we enter the “Year of the Snake” on the Chinese calendar.  And according to some Asian astrologers, the year might be just as ill-omened as the name sounds. According to AFP, “Astrologers say this year’s snake is identified with the element of water — symbolizing fear — that sits on top of the fire element, representing joy and optimism. They say conflict between the two will bring turbulence in May.”  In China and … more

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