Should Thrift Savings Plan investors have concerns?
January 28, 2008
YOKOSUKA NAVAL BASE, Japan — A steep falloff in the stock market one day followed by a sharp rise the next.
Then it plunges again.
Such has been the case recently on Wall Street. Money experts throw out terms like “economic slowdown,” “global recession” and “sub-prime mortgage crisis.”
Congress and the White House scramble to put together an economic stimulus package.
With uncertainty in air, should investors in the federal government’s Thrift Savings Plan worry?
Judging solely by the short-term numbers, some might think so. A civilian in Yokosuka Naval Base’s Fleet and Family Support Center was overheard describing the market conditions as a “slow grind to hell.”
Camp Zama’s Sgt. William Mortley is betting on America’s historically resilient economy and “hopefully some smart guys making decisions” to keep the market from tanking.
According to FedSmith.com, from October to Jan. 15, TSP’s C Fund has declined more than 10 percent, the I Fund has dropped 12 percent and the S Fund has fallen 14 percent.
Mortley said he has been hearing “bits and pieces” of the current market woes, but “TSP is a long-term investment and I’m not one to panic.”
Collin Schriver, an accredited financial counselor for Yokosuka’s Fleet and Family Support agreed that now is not the time to panic, although he said he understands people’s concern.
“We’ve seen this before,” Schriver said. “But if you look at the market in 10-year increments, it hasn’t returned a negative number since 1929.”
Market volatility at the beginning of this decade prompted some TSP participants to chase higher returns. Some sold fund shares at the peak of the bull market and moved their assets to different funds at the bottom of the market, losing money all the way.
According to Schriver, that is not the way to go.
“Stock values never really go straight up; they all rise and fall over time,” Schriver said. “It’s all about risk management and risk tolerance.”
Schriver suggested that investors within four years of retiring consider shifting money into the less risky G Fund. But for anyone else, a panic response could wind up costing a lot of money.
Petty Officer 1st Class Hamilton Naidas isn’t losing sleep over the current market woes.
“I haven’t worried about it,” he said. “I’ve been investing money in TSP for about six years, and I expect to contribute for at least another 10 years. I’m not worried about these short-term market fluctuations.”