How To Avoid the TSP G Fund Trap

[@TheFedCorner]

READ THE FULL ARTICLE: thefedcorner.com/current-resources/f/how-to-avoid-the-tsp-g-fund-trap

[@menasiak7173]

Very helpful thank you

[@TheFedCorner]

Glad you think so!

[@keegan0525]

Makes sense, but with recession fears looming and experts predicting a more severe downturn, wouldn't moving funds into the g fund now and reinvesting at the first signs of a recovery be good strategy? If you do not predict the market to recover quickly, investors would have time to reinvest without cementing major losses. Please correct me if I'm wrong.

[@TheFedCorner]

Great point, Marco! Yes, if an investor has developed a plan that calls for this. For example, this could be in circumstances where they need access to the capital in the next couple of years. We've generated cash for our clients that are retired, but not for clients who are still working several years and don't need their portfolio. The challenge we're seeing is that most feds are panic-selling into the G-Fund. Their decision is emotions-based, not methodically from an investment policy statement. That emotions-based reaction makes it that much more difficult to work up the courage to reinvest when there are signs of a recovery, typically after even more damage is done. The PLAN should lead the investments, not the other way around. Hope this helps!

[@lenhua1947]

until inflation under controlled

[@JoseGarcia-rl1iw]

No one can time the market.

[@glasshalffull2930]

Now in 2024, the S&P had recovered by the end of 2023 and gone on to new highs. looking back at 2022, there were about 10 bottoms where the market started to rebound, but each time the market dropped again. Exactly, which bottom did you reinvest ? Trying to time the market is a foolish endeavor. Miss the bottom by a few weeks and you’ve lost all the gains.

[@stephendibari5010]

Great video. New subscriber. I moved everything into the G in March timeframe of this year. Since June I’m using the 120 rule which is deducting my age 58 years old from 120 and putting that number (62%) as a percentage into the common stock C fund, and I’m splitting the difference (38%) into the G and F funds. (19 % each). I’m retiring at 65 years and eight months in December 2029 and every year on my birthday I will adjust the numbers accordingly. Since June I’ve already seen an approximate 7-10% growth in my fund

[@TheFedCorner]

Hi Stephen, thanks for subscribing. We love to hear that you have a rules-based approach to investing. This helps to remove the emotional biases that investors face regularly. Just make sure your investment plan is aligned with your retirement plan. Thanks for your comment!

[@stephendibari5010]

@@TheFedCorner yes this eliminates the emotional thinking. I’ve been up and down since March watching the S&P 500 go up and down like a rollercoaster. Crazy. Set and forget it. My TSP account shot up nearly 30k since I changed into the 120 rule approach, then yesterday it dropped nearly 10k after a 1.9% drop in the S&P. Have to stop watching. Old habits are to break. Lol

[@TheFedCorner]

@@stephendibari5010 Watching too frequently can cause major stress during volatile markets. Glad it's working for you! -TG

[@stephendibari5010]

@@TheFedCorner thanks ! I have to make a habit of not looking

[@Gzluweez]

Super not helpful. Sure markets shoot up fast-sometimes-can also take 5-10 years just to get back to level. Constructing an investment barbell discussion would be more useful.

[@TheFedCorner]

Sorry to hear you didn’t find it helpful. Thanks for the feedback, I’ll consider doing a video on barbell method investing in the future. -TG