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Varchild2008 (85.49)

Thrift Savings Plan and the 2007 - 2009 Bear Market

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April 05, 2009 – Comments (5)

*Sigh* Since no one knows about the Almighty "TSP" known as the Thrift Savings Plan in spite of it being mentioned in former President Bush's State of Union Speech regarding Social Security reform....

Here's the explanation....

TSP has far more money in it than any Hedge Fund or Mutual Fund or anything else equivalent.
It beats out any 401K, IRA, or any other Retirement Vehicle from any corporation in the America, or perhaps even the World.

It is just that BIG.   It is humongous....

TSP began in the 1970s with very limited options for investment.  There probably was a (G) Bond Fund and 1 or 2 Stock Market Index Funds (C) Large Caps and (S) Small Caps.

The (I) International Index and the (F) Fixed Income were later introduced.

What is TSP???  It is the GOVERNMENT's Retirement Plan for CSRS and FERS employees.

CSRS and FERS are the only 2 types of retirement vehicles dealing with how Pensions are handled for Government Employees.

CONGRESS
Active Duty Military
Reserve Duty Military
Retirees who have yet to drain out their TSPs cashola  (at age 72 you are required to start withdrawing your money)
Civilian Government Employees
DOD
DA
NAVY
MARINES

Every single Government Employee include State, Teachers, Postal Wokers, you name it....
They all get a chance to participate in the TSP.

Well.. In effect.. Employees are somewhat FORCED to participate in the TSP because the Government does automatically provide you with at least a 5% Matching Donation for each Pay Check to your TSP.

So... Ultimately... We end up with a 401K of sorts for Government Employees that overtime has accumulated TENS of BILLIONS of DOLLARS....

During the Good Times... The (C) Large Caps and (S) Small Caps and (I) International Index Funds get most of the money....  While only the (G) and (F) funds get money during really bad and scary times.

So imagine the October Panic.... Imagine $5.8  Billion Dollars pulled out of the Stock Market in 30 days or less??  Then imagine that happening again in the November Panic.....

Some money got put back into the Market during the December/January Bear Rally....

Then.. When investors felt the Bear Rally was a Head Fake.... $2 Billion Dollars in February gets immediately Yanked out of the Stock Market.

Now.. We have witnessed MARCH.... An Historic Rally of more than 20% from the bottom.

I can't even imagine how much CASH the TSP Government Employees have flooded the Stock Market with and I can't stomache the thought that this could go on for another 2 months.

It is absolutely Shocking to imagine Tens of Billions of Dollars from "Opportunist" investors launching cash straight into the Market.

Ya see..   TSPers are able to swap their money between Index Funds at any time.. About twice a month  (It used to be unlimited transaction swaps could be done each month but those rules were changed in Mid 2008).

So.. While all of these Stock Market "experts" are out there bashing the Rally as a head fake...
Just remember those BILLIONS of DOLLARS sitting in the (G) Fund.. Getting Ready to be dumped back into the Market now that DOW is at 8017 and everyone smells a recovery.

The percentage out of each paycheck that goes into Stocks may also increase because of this rally.. There is just so much CASHOLA from the TSP that America's Stock Market is starting to revolve around it.

5 Comments – Post Your Own

#1) On April 05, 2009 at 6:27 PM, MikeBobulinski (< 20) wrote:

I get a 5% matching donation, from the government?  Really?  I don't see it in my TSP.  Where is that option expressed or explained in TSP?

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#2) On April 05, 2009 at 6:36 PM, MikeBobulinski (< 20) wrote:

Apparently, the matching only applies to civilians under TSP.  None of the service secretaries have authorized matching contributions.  SO, those in uniform do not get them.  Sure would be nice to have that option approved and in place...but once again, those in uniform have to fend for themselves with respect to retirement planning and funding.

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#3) On April 05, 2009 at 7:23 PM, Varchild2008 (85.49) wrote:

It's near the bottom of your Paycheck where it mentions your current paycheck's and year to date's Government TSP contribution.

Correct, only civilians at this time.  There was some "rumor" about Congress looking to include those contributions for service members... But that never went anywhere...

The biggest changes are the possibility of adding some kind of IRA investment to the TSP contained within the Tobacco legislation.

See www.fedsmith.com   for full details on TSP and other government issues.

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#4) On April 05, 2009 at 11:18 PM, UltraContrarian (31.97) wrote:

"TSP has far more money in it than any Hedge Fund or Mutual Fund or anything else equivalent.
It beats out any 401K, IRA, or any other Retirement Vehicle from any corporation in the America, or perhaps even the World."

Wrong.  At $222B, it is smaller than the sovereign wealth funds of the UAE ($875B), Norway ($391B), Singapore ($330B) and Kuwait ($264B).  Also smaller than the assets under management of American Funds ($650B), Vanguard (approx $1T) and Fidelity (approx $1T).

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#5) On April 06, 2009 at 4:52 PM, Varchild2008 (85.49) wrote:

Is this based on a 1 to 1 ratio or are you simply lumping several different individual funds together and comparing it to the TSP?

*just curious* as the answer to that question greatly influences whether I am right or wrong here.

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