Investing methodically is a strategy that emotionally is not for every TSP investor, but certainly worth trying. Image: Dilok Klaisataporn/Shutterstock.com
By: Abraham GrungoldI am a 38-year investor in the Thrift Savings Plan (“TSP”). As a federal retiree, I still take my TSP investing seriously. I experimented with all the funds as they became available. Contributing to the maximum of what you can afford and investing as aggressively as you can tolerate is the double edge sword to becoming a TSP millionaire. Moving my TSP balance to the G Fund may have happened perhaps once or twice during my federal career.
During the history of the TSP, there have been many times to invest when the stock market has taken a dip. That dip could be anywhere from 10 percent to 40 percent. Those time periods were the Dot.com era, (2000), Financial Crisis of 2008-2009, COVID 2020 and the Ukrainian Crisis 2022. Each time the market dropped it came back higher than before. This is documented on the TSP website.
When the market goes up and down, every pay period you are purchasing units of your TSP at different prices points. These purchases are called dollar cost averaging investing. As the market reaches all-time highs, the value of your TSP should be at an all-time high especially if you are purchasing in the funds other than the G Fund. There is nothing wrong with being a 100 percent G Fund investor. You will simply not become a TSP millionaire only using this investment vehicle.
Prior to the 2024, I was 100 percent in the C Fund. The outcome of the Presidential Election gave me the feeling of uncertainty regarding the stock market. Prior to the election, I moved my entire TSP multimillion dollar account to the G Fund. After the election, the stock market rose approximately 10 percent to its all time high in February. I lost the opportunity of my account to increase by 400,000 dollars.
Now, in March, the stock market is seeing an adjustment due to the potential tariff policies, and the uncertainty if the Ukrainian War will end. They have been other contributing factors such as the bird flu and the federal layoffs. Financial experts see a recession where others see a bounce in the stock market where there will be all-time highs by the end of 2025.
As for me, when the market took a dip of 10 percent in the middle of March, I saw a buying opportunity in the C Funds as if it was an Amazon Prime Time sale. Everyone loves a good sale. And I bought into the C Fund with 25 percent from my G Fund. The market dropped again this week and I moved a total of 40 percent from the G Fund into the C Fund. The sale got even bigger and I was buying into the C Fund at lower share prices than when I pulled out prior to the Presidential Election.
Sell high and buy low is the key to a successful TSP. Panicking and pulling out is a recipe for disaster. You are recognizing a loss to your TSP when you do this and by doing nothing you do not risk anything with your TSP and it most assuredly will be higher at some point into the future. You have a long federal career ahead of you.
When I moved 40 percent into the C Fund that was my 2nd TSP investment allocation transaction for the month and you are only allowed two. I anticipate that on April 2, when the new administration tariff polices are implemented, we may see another drop in the market.
For me that will be a bigger opportunity to move more of my G fund into the C Fund. This strategy is called a downward market ladder purchasing. I am buying cheaper shares of the C Fund and doing that at different price levels. I am expecting to be 100 percent in the C Fund by the end April. If I am only 40 percent in the C fund instead of 100 percent, no problem – there will be other buying, Fire Sale, opportunities for me.
Investing methodically is a strategy that emotionally is not for every TSP investor, but certainly worth trying. Using computer metrics, and taking advice from strangers in Facebook forums are not good strategies. Use the TSP website resources and look at what moments in history caused the TSP to drop value. Learn from those historical moments and take advantage of those moments for buying opportunities.
Proper Planning Prevents Poor Performance.
Abraham Grungold is a retired federal employee with 36 years of federal service – including with the USPS Inspector General, the VA Inspector General, the US Dept of Justice, and the US Dept of Labor. Through his company AG Financial Services he helps federal employees with their TSP and federal retirement planning and decisions. Mr. Grungold has written over 80 articles regarding the TSP and FERS retirement and been a guest on several podcasts with the Federal News Radio and Government Executive Magazine.
Key Bills Advancing, but No Path to Avoid Shutdown Apparent
TSP Adds Detail to Upcoming Roth Conversion Feature
White House to Issue Rules on RIF, Disciplinary Policy Changes
See also,
Legal: How to Challenge a Federal Reduction in Force (RIF) in 2025
The Best Ages for Federal Employees to Retire
Alternative Federal Retirement Options; With Chart
Primer: Early out, buyout, reduction in force (RIF)
Retention Standing, ‘Bump and Retreat’ and More: Report Outlines RIF Process
