The Best TSP Investment Strategy!



hello friends this is Cooper again with FEHB retirement planning comm and today's topic is on the best TSP investment strategy this is a question that I probably get more than any other literally every day I go into my inbox I have questions from people asking for advice in this area and so I'm going to detail it in a video a little video is a great format it's not the best for providing you know comprehensive information so if you'd like more detail on this topic if you go on the link in the bio below you'll be able to find a full rig article I've done on the topic with a lot more information photos and all sorts of fun stuff that you can find now as I often detail in these videos there's an abundance of financial experts gurus out there who will tell you you know all these blanket statements that you should do right so everyone should roll their TSP to an IRA everyone should you know not choose the survivor annuity plan and choose life insurance okay everybody should drop FEGLI because it gets too expensive okay these are statements that a lot of people make these aren't ones that I necessarily agree with for everybody okay although in certain cases these may be great instances for everybody that's not necessarily the case first off though I want to discuss why people are so interested in perfecting the TSP investment strategy okay because at least from the questions I did it's pretty apparent that people think that there is a perfect investment strategy that there is a foolproof strategy that if they invest that way you know it's going to make all their dreams come true for retirement but unfortunately that's not the case when I started my blog this YouTube channel I had to ask myself you know why did the same questions keep cropping up why did I keep getting questions from people asking you know I'm getting close to retirement how should I have left my TSP you know I just started how do I invest my TSP is the C fund better than the Z funds you know you know there is no refund but there's all these you know questions I get over the same topic and when I started this I thought that you know I get these questions but I didn't assume that I get so many of the same questions in fact I kind of assumed that it get a lot of questions on you know paying down debt and creating a plan for retirement and you know how to invest for people's goals and all these different things that you know I do as a day-to-day financial planner but those aren't always the questions I get so I ask myself why is this happening I don't know you get me wrong I believe that there is such a thing as a great investment strategy for a person okay it depends on who you are okay there's a lot of factors that play into it but I don't want you to think that I'm saying you know you should just invest haphazardly without any worry of the repercussions what I'm saying is a teepee allocation is simply a small slice of a very large pie okay it's only one part okay and if you put too much focus on that one part then the rest if you're not you know putting any due diligence towards it it's going to end up not making the whole picture turn out well okay because you can't just have one area that's great that will overcome every other area because that's not just how it is so I came up with an answer okay I came up with an answer of why people are so interested in a TSP investment strategy over the other things and the reason is because it takes a whole lot less effort to choose an allocation within the CSI FG or the L funds than it does to do specific comprehensive planning for their life okay it takes a whole lot less effort to go to tsp.gov to log into your account to change your allocations you know then it does to you know look at all your expenses detail what your actual goals are line up your money with what you're earning with what you're spending line up what you're earning so that you have enough money to meet your goals later on in life okay that takes a lot more time and effort and although it provides a better outcome and I've seen it provide a better outcome than just choose an allocation strategy choosing the allocation strategy is much simpler and takes much less time so if you're curious like I was that's the reason okay you get it you figure out why people want an investment strategy but you came here because you want to know what the best TSP investment strategy is and I hate to burst your bubble but there is no one single best TSP investment strategy okay there's just not there's just not one strategy that you know works best for every person okay because there's a lot of other things that play into what the strategy does for the person that makes it better than another one let me tell you a story real quick okay when I was younger I got poison ivy a lot I still do poison ivy lies in fact I get it so much that if I even get close to it enough to smell it then I get it okay it's almost automatic I get it so easily okay well when I was younger I got it I ran to my mom and I said mom you know I've got poison ivy is there anything we can do about it okay so well what we normally do is we go to the urgent care so we went to the urgent care met with the doctor I went to the doctor and I said please doctor and this was you know little Cooper not knowing so much about the human body and things like that but I went up to the doctor and I said doctor I want the absolute best medicine you have okay well the doctor sat me down and said son there is no best medicine it just depends on your condition well I learned a life story there and it applies directly to this okay there is no best TSP investment strategy for everyone it's just not the case okay it depends on what your condition is it depends on what part of the you know retirement path you're on it depends on what your goals are all these different things okay if you were to choose an investment strategy solely based okay solely based on its performance okay and you just wanted to choose one fund and you were just saying okay I just want to choose the best performing strategy I don't care about risk volatility anything else I just want my investments were pulling the best well then you'd look at the s-1 okay because the S fund has outperformed all funds you know over the past five years over the past ten years since its inception by you know a good margin in fact it's ten in your average as of today which is 2017 is around ten point five nine percent IRR so it's about ten and half percent okay the next closest average the next closest you know best performing investment is the C fund which is around 8% okay but we must remember that higher returns do not equate to best investment that's not the case okay so don't just invest in this just because I tell you that the S fund has performed the highest because that doesn't mean that it's best for your situation now many of you have the understanding that diversification you know putting in different tools that are available to you like bonds in the F bond or international stocks for instance in the I fund can provide diversification so you know for instance if the US economy is not doing well but the international economy so basically everywhere else besides the u.s. is doing well well then you're not going to be hit with a full brunt of the u.s. not doing well in that affecting your entire portfolio okay same thing with bonds so you know stocks aren't doing well in bonds are well if you're allocated some within bonds and you're diversified in bonds well then you're not going to be hit with the full brunt of stocks not performing well because you're diversified oh I suggest looking at those different tools that can help you achieve your goals okay you must have set goals what's the reason in investing for a 10% rate of return if you only need a 7% rate of return to meet all of your goals and expenses in retirement okay because although you may be trying to achieve a 10% rate of return that doesn't mean it's going to happen okay so although you know the past 10 year average for the S fund may be 10 percent that doesn't necessarily mean it's going to happen in the next 10 years so you may be taking on more risk than you need to to meet your goals if you lowered your risk tolerance or lower the actual risk that you have in the market by going into a fund that achieved less or has historically she's list then you may be better off in retirement this has been Cooper with Federer time remaining calm keep your questions coming I appreciate them they allow me to create content like this and we'll see you next time so Davis all night

19 thoughts on “The Best TSP Investment Strategy!

  1. Cooper, I've been watching your videos and following your research since I joined the service in early 2016. Great stuff and amazing advice. I've learned a ton from you. I think doing a live chat where people ask questions would be outstanding! I've got so many for you man!! Keep doing great work. You're a smart man.

  2. There is something that a lot people overlook. That is (for example) if you have 300K in any investment and lose ten percent you will need MORE than ten percent just to break even because your principal dropped from 300K to 270K. Your money has to work harder just to break even. This is why it is better to diversify as the lifecycle funds allow you to do. You are hoping that if one investment goes down another will pull you up. Some day I think the TSP will have even more diversity. The ultimate goal of a diversified investor is to have ALL of his investments moving upward and although this does happen on occasion it is the exception and not the rule.

  3. you do have tons of great info..thx.Coop.  do you think it is possible to get 6 to 10% a year in the TSP? or you think it is better to get out of TSP? I am leaving in 3 months.. thx ALBERT

  4. Why is the 2040 Lifecycle fund already at 20% in the G fund? That seems a bit more conservative than prudent. The 2050 is already at 11%. It seems the Lifecycle funds prefer G then C the closer to the target year.

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