Federal Employee TSP
All investment options are diversified privately managed funds. Retirement plan information has been provided by federal employees.
Traditional asset allocation theory recommends investing in multiple asset classes of unrelated investment types, such as equities, bonds and cash.
Typical asset allocation models are presented here for your reference: Aggressive Moderate Conservative 
CAUTION: USE "PIE CHART ALLOCATION" AT YOUR OWN RISK. THE PROCESS IS NOT DESIGNED TO PROTECT YOU FROM DOWNSIDE MARKET RISK. IT IS THE WAY 401K PORTFOLIOS ARE TRADITIONALLY CONSTRUCTED. KEEP READING FOR A BETTER UNDERSTANDING.
“We’ve been on a roller coaster ride in the financial system and the economy over the last 25 years. It’s going to continue. Now, it’s going to be a roller coaster on steroids. Things can go wrong like it did…May 6th…in the US stock market. ...People need tools to navigate through this. Buy-and-Hold is gone as a basic investment philosophy. You have to watch the financial flows and take some money off the table when liquidity starts to go the other way.” - J.A. Boeckh
Significant insights were revealed in January 2010 by one of the leading proponents of index investing and an icon of the academic community – Ibbotson Associates’ president, Peng Chen. In an interview with Morningstar discussing Modern Portfolio Theory and its dismal 2008 performance in protecting accounts, Mr. Chen said:
“…we also realized that one of the traditional measures in modern portfolio theory, in particular on the risk side, standard deviation, does not work very well…”
While past performance is not a predictor of future returns, it may provide you with some reassurance that your current investment selections remain within favored market segments.
Any employee using this relative strength listing as a tool for allocating a retirement portfolio should check quarterly for new ranking updates that may indicate a change in investment selection.
Whenever a plan does not provide a money market or stable value choice for use, the shortest term or highest quality fixed income option is the recommended alternative.
Diversification is still good process, however, diversification neither assures a profit nor eliminates the risk of experiencing investment losses. We do not recommend investing in less than five of the available options as long as they rank higher than the money market. If money market is ranked #3, it implies 60% money market and 20% in each of the two higher ranked assets.
Diversifying your account into the two strongest investment options may provide greater returns. Concentration, also, increases value fluctuation in response to short-term market volatility. Individual goals, risk tolerance and proximity to retirement should be carefully considered.
Investor Resources, Inc.'s (IRI) investment committee's view of the markets changes over time with changes in the relative strength of sectors and asset classes. Periodically, IRI's investment committee may favor domestic and international equities over fixed income or favor small company growth over large companies or value.
We agree with behavioral finance research that investing success is more likely when you are not emotionally tied to your investments. Consider how much pain would have been avoided in the lives of those who were committed to Enron, Tyco, JD Uniphase, GM or Chrysler if they had an objective relationship with their stocks.
The stock and bond markets have many segments. The Thrift Savings Plan has very few choices which provide a very broad exposure to various market components. Consciencentiously rotating your account to the market segments exhibiting superior strength should allow you to improve performance over a "buy and hold" (i.e., "sit and take it") strategy.
Fundamentally, we do not recommend investing in assets ranked below money market. Preserve your cash until the assets once again establish a positive bias in their returns and prices. Since the TSP does not provide a money market option; the F or G funds would be the safe haven.
Matrix Updated on 03/30/2012
Investment options are ranked by the previous ten week’s relative strength.
It is our opinion that investing success is more likely when you are not emotionally attached to them. Consider how much pain would have been avoided in the lives of those who were committed to Enron, Tyco, JD Uniphase, GM or Chrysler if they had maintained an objective view of their stocks and willing to let go of them in the midst of market decline.
CLICK HERE to see how asset rankings have rotated through previous quarters and exposure to the 2008 market melt-down could have been avoided.
THERE ARE HIDDEN RISKS IN TARGET DATE FUNDS. This is especially important to understand and manage in the five to ten years before and after retirement. A significant downturn in capital markets can materially change your retirement life style.
Your choices are limited to the investments approved by your plan trustees. We believe the asset listing was obtained from reliable sources. If there is a more up-to-date investment listing, please contact us at 800-317-9119 or Info@InvestorResourcesInc.com.
Thift Savings Plan investment accounts are privately managed and not available to the public. We have used publicly traded investment options to rank recent market performance which may not be an exact clone of the investment options available to employees. We believe the investments used for ranking purposes are sufficiently similar to the investment objectives of the employees' options to be reliable for the stated purpose.
Who manages the Thift Savings Plan investment funds?
The assets of the G Fund are managed internally by the Federal Retirement Thrift Investment Board. The assets of the F, C, S, and I Funds are managed by outside investment firms. The Board currently has contracts with Barclays Global Investors, a U.S.—based subsidiary of Barclays PLC (a publicly listed financial services company based in London, England) to manage the F, C, S, and I Fund assets. Barclays invests the assets of the F, C, S, and I Funds into commingled trust funds in which the assets of many tax-deferred employee benefit plans are combined and invested together. The F, C, S, and I Funds remain invested in the Barclays funds regardless of the performance of the securities markets. (Emphasis added) The Barclays funds in which the F, C, S, and I Funds are invested are index funds, or passively managed funds, each of which has a portfolio based on the composition of a market index.
DISCLAIMER:
This information is provided by Investor Resources, Inc. , a registered investment advisor, and is believed to be from reliable sources, but no guarantee is made as to accuracy or completeness. The investment securities and strategies discussed are not necessarily suitable for all investors. Recommendations are of a general nature, not based on knowledge of any individual's specific needs or circumstances, and there is no intent to provide individual investment advisory, supervisory or management services. Investor Resources, Inc. is not an authorized representative of the federal government or of its thrift savings retirement plans.
Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client or prospective client’s investment portfolio. Historical performance results for investment indices and/or categories generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results.
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