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NOT AFFILIATED WITH THE U. S. GOVERNMENT
PLEASE READ ABOUT 'HYPOTHETICAL'
IN THE TERMS OF USE HERE
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How to Build Extraordinary Wealth
Using These Five Words a Week Starting Today
Why and How to
Manage Your Own
Retirement-Investment Program
This system is designed specifically for the TSP. That's the government pension savings plan for U.S. Federal employees. It is the best pension plan in the world, bar none. With it, you can vastly increase your own retirement wealth by personal, active management. You can do this with minimal risk. Private individuals can also use this system for their own retirement funds or personal investments. 
Safety is by far the most important factor. Half of TSP's 4 million members keep all their money in the G Fund nearly all of the time. You can't lose there because you own a continuous stream of interest payments from the U.S.Treasury. These are based on the weighted average yield of all its outstanding bonds and notes with four years or more to maturity. But you may use any of the other four TSP funds as you choose. What about the risk in the stock funds, or even in the bond fund? Is it worth taking? And is it worth the time and trouble? We shall see below.
Of the five funds to choose from, four are 'risky', one 'safe'. Two of these, risky and safe, are shown above, along with the TSPselect System hypothetical test results over the last eight years, 2002 to 2010.
How much wealth is possible? That depends on three things. How much knowledge, skill, and experience do you have investing? How much risk you are willing to take, or none? How much time you are willing to spend managing your account?
The answer to the first question can be zero if you use TSPselect. You will see why in a minute. The answer to your second question is close to zero. (More on this below.) The third answer is, a lot more time, or a lot less than you are spending now. You'll see why and how.
This simple table gives you some idea of the wealth possibilities using the two 'best' TSP funds versus the TSPselect System, the program offered on this site,compounded over the periods shown.
PROJECTED WEALTH COMPARISON
Best TSP Funds vs
TSPselect System
Dollars
Hypothetical
|
Years |
G |
S |
Select |
|
start |
10,000 |
10,000 |
10,000 |
|
5 |
12,300 |
15,016 |
20,199 |
|
10 |
15,130 |
22,549 |
40,799 |
|
15 |
18,610 |
33,860 |
82,409 |
|
20 |
22,891 |
50,845 |
166,455 |
|
25 |
28,156 |
76,350 |
336,217 |
|
30 |
34,632 |
114,649 |
679,116 |
G is the TSP "G Fund" (Government Securities Investment Fund).
It is a 'best' fund because it can never have losses.
All the others can
and do.
S is the TSP "S Fund" (Small Cap Stock Index Investment Fund).
It a 'best' because it has produced
the most wealth
of all TSP funds over the period of this study.
Select is the funds-management system offered on this website.
Its hypothetical score, at the 10-year mark, would be
two and a half times the wealth of the G Fund
and twenty times G Fund's projected wealth in 30 years.
TSP actual accounts average size today is
approximately $100,000.
In 20 years, the workout value could be
$1,160,000.
How does it work? The system picks the strongest of TSP's five fund choices at any given time--and more importantly--clearly identifies the trend of the market, up or down? There two ways an investor can pick a fund, or funds, and decide on the market trend.
One way is to consider and weigh general economic conditions and the 'fundamentals' (the business profile) of the company or companies behind each stock or fund and their outlook for the future. These decisions are complicated, difficult, uncertain, and subjective.
The second alternative way to make the best choice and to decide what the trend of the market is, is to consider only the fund prices alone and nothing else. Those are the factual, recorded, continuous history of what everybody thinks of the market and its funds. The sole question is: what to buy, depending on what the trend of the market is (not what it was, or is going to be). This decision is totally simple, easy, certain, and objective.
The outcome may be uncertain, but everything that went into the decision is certain--and therefore easy to understand, handle, and act upon.
LOSSES
After reading this, you will banish forever how you think about losses and risk from stocks in a pension fund. You will see how TSPselect controls and reduces risk to minimal levels in their impact on the fund. This means you can have a tremendous amount more wealth in your retirement than dreamt of before.
The program has built in an early-detection, rapid-response, data-processing subsystem that immunizes against loss within a week or two of the start of any bear market. This is very important. Lack of real immunity from stock and bond losses is the reason that half of all dollars held by participants in TSP is invested in the G Fund. Without immunity, a portfolio is vulnerable to severe damage--possibly beyond hope of any recovery before retirement.
It took 25 years from the top of 1929 to 1954 before the stock market was able to make a new high again. Who knows when then next bear market will recur? Are we still in the present one now? Do you know anyone who knows the answer to that? Not an opinion, but a firm, infallible answer. The new bull-market profile will occur the broad-market indexes make new all-time highs above the levels of their year-ago price peaks.
The G Fund is not riskless. You cannot lose your money or your income. But it has the real risk of inflation which can kill the buying power of your income and threaten your standard of living. All the TSP funds have suffered loss years except the G Fund. See here and click on the tab, Individual Funds Chart. The TSPselect offset to risk is diversification. Many of you already do that, but you take a hit when a bear market or a crash occurs.
Diversification is the accepted way to reduce risk in the investment business.
If you know anything about the market, you know that the common-sense, standard advice is to diversify your holdings. That does reduce risk. But we do this differently, not in the way you might expect. The TSPselect system program holds only one fund at a time (each of which is well diversified in itself due to its multiple holdings), but the program varies the length of time each fund is held and the frequency of changing from one fund to another. It is diversification horizontally by time rather than vertically by multiple holdings owned continuously.
Where do you think the greater safety lies? Promptly getting out of all funds when trouble arrives?--or holding your ground with the diversified, unified strength of four or five funds staunchly standing together in the face of adversity? You already know the answer to that just by looking at history. The table below helps to remind you.
The worst %losses in values (fifth column for the TSP funds are severely damaging.* The worst loss for the System is minimal (with virtually no adverse effect on final wealth outcome as we shall see) and recovers immediately, lasting only two weeks (final column, duration in months) compared with a duration of up to 17 months for the TSP funds . . . so far. Annual returns (fourth column, %/year) with active System management is nearly double than the comparable %/year returns from the TSP stock funds, S and I, and more than triple the %/year return from G.
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* Psychologically, loss caused many to sell and others to develop deepening anxiety for weeks and months for over more than a year). The damage to the funds themselves was real because it built high walls to climb in order to surpass previous peak levels. C Fund, for example, has to gain 178% from its bottom price to get even again. The other two stock funds both require gains over 160%. This takes time, sometimes too long a time--like 54 years (see
above).
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RETURN and RISK COMPARISON
TSP Funds vs TSPselect System
Actual & Hypothetical
Eight Years
October 11, 2002--July 9, 2010
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total |
%/ |
worst |
dur |
|
Fund |
Type |
% gain |
year |
%loss |
mos |
|
S |
small cap |
90 |
8.6 |
-57.7 |
17 |
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I |
international |
88 |
8.5 |
-61.6 |
17 |
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C |
big cap |
28 |
3.3 |
-56.2 |
17 |
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F |
fixed income |
34 |
4.5 |
-9.3 |
4 wks |
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G |
Trsy income |
36 |
4.1 |
-0- |
-- |
|
System |
active |
297 |
15.1 |
-7.6
|
2 wks |
Why loss does not matter in TSPselect. The secret to loss analysis is frequency and cumulation, not isolated single events. For example, C Fund's longest continuous string of profitable weeks is 11. TSPselect's is 51. That's a vast difference. Further, TSPselect's loss strings are mostly one and two weeks, with only one three weeks long. Its loss was -4.2%. TSP funds' loss strings are numerous and extensive and the cause of the severe declines during the 2007-2009 bear market. You can see that in C Fund here which is typical of the loss rampages in each of the other stock funds in TSP
(here).
Why no investment experience is necessary. Because the site is designed solely to give clear, specific, short advice. It tells all in five words per week. No kidding. You will read them in seconds. You don't need to do anything else except to phone TSP about three times a year to place an interfund transfer order or do it on the internet.
Time required? Three seconds a week, 52 weeks a year. Total less than three minutes per year. Placing a change order, maybe five minutes at the most. Three per year, total 15 minutes. But you should be sure to it check every week. If you are on vacation or cannot for some other reason, then delegate it to a family member or trusted friend. That's all there is to it.
What you get--the Five Words a Week. An action notice once a week on Sunday afternoons, Eastern Time. It is short, clear, and to the point. It includes a listing of all recommendations over the previous 26 weeks. See the Sample link at the bottom of this page to view a copy. You may request an email alert each week to let you know in advance when the action notice has been posted on website.
Try the program free for 60 days. If you don't like it, cancel. No penalty. Costs you nothing. If you like it, do nothing, and you will be billed an automatic base maintenance fee of $15 a month for as long as you are a subscriber. You can quit any time before or after the end of the free-trial period. Please go here to sign up now: subscribe.
Steps. Sign up. Log in. That's all there is to it.
You will be taken straight to the current week's recommendation page. If you are directed to make a change in funds, a link at the bottom of that page will take you directly to the tsp.gov log-in page where you can immediately access your TSP account online, or by phone. If you wish to be notified weekly in advance as soon as the recommendation is posted, sign up here after you have subscribed.
How to start. Very gradually. This is your retirement money. You want it to be there. It all comes down to confidence and the future continued success of the program. Recognize that until real system results accrue, your evidence in its favor rests on hypothetical testing of real fund results in the past. First watch everything on paper--put no money to work. Then consider putting only a small portion of your account into the program and watch how that goes. As time passes, and real results are satisfactory, gradually add more up to your comfort level.
Cost and Guarantee. The base maintenance fee remains valid for as long as your are a subscriber. Our guarantee is that TSPselect will beat the G Fund every six months. If it does not, your base fee is reduced. If Select's gain beats G's gain, the base fee rises. The rise or reduction is proportional to TSPselect's gain or loss. We share the same investment incentive you do: make money without losing. Please go here for details and an example.
Important Note. Preliminary cross-checking shows TSP actual-account returns are 20-25% greater than the hypothetical system returns reported on these pages. That is because the public proxy funds used in the Select system do not report and include dividends and earnings which are available, included, and reported by the Federal TSP investment manager of the actual funds used in participants' accounts.
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TECHNICAL NOTES
Chart reading. Funds start with an index value of 100. At the end, their values have increased to the amounts shown. Click on the chart at the top of this page if you wish to enlarge it.
Proxy for the G Fund. The proxy used for G is the 10-Year Treasury Constant Maturity Rate (source: Federal Reserve Bank of St. Louis). The coefficient of correlation is 0.9806; the eight-year final wealth results are nearly identical. The real G Fund's return is 0.02% greater than that of TSPselect. (G Fund does not publicly provide weekly data. Thus, TSPselect shows lower performance than if it were able to include the actual G Fund data in its portfolio.)
Note on transfers between funds (IFTs). As you may know, you are allowed two interfund transfers per month. Occasionally TSPselect will give more than two signals in a calendar month. That can mean you may wind up in G Fund before the month is over and are unable to do an additional transfer if Select calls for one. Simply wait until the first day of the next month and follow the most recent weekly signal then.
These events rarely happen. Their effect can be positive or negative. In either case, it is negligible. You cannot lose money. You remain in a position of maximum safety until the next signal arrives.
TSPselect reports weekly results. These may differ from individual TSP account results due to methods of valuation and unannounced adjustments made by the contract investment manager hired by the Federal Retirement Thrift Investment Board. (See Notes to the Financial Statements of the Thrift Savings Fund, 2009-2008, Fair Market Valuations, at the same link.)
TSP definition. The Thrift Savings Plan is a retirement savings and investment plan for Federal employees and members of the uniformed services. It was authorized by the United States Congress in
the Federal Employees’ Retirement System Act of 1986 (FERSA). The Plan provides Federal employees and members of the uniformed services with a savings and tax benefit similar to what many private sector
employers offer their employees under 401(k) plans. The Plan was primarily designed to be a key part of the retirement package (along with a basic annuity benefit and Social Security) for employees who are covered
by the Federal Employees’ Retirement System (FERS).
Special Notice to Non-TSP Members. The system on this site is open to the public. It can be used in unrelated IRAs and all similar types of tax exempt or deferred-tax pension / retirement plans as well as in personal investment or trading accounts. Related ETFs that mirror the funds in the system are available in the market. These can potentially double or triple system returns and also enable short selling, adding to potential profitability. See Symbols.
Acknowledgements. We owe writing this article to a question and suggestion some years ago from a longstanding TSP member who also subscribes to some of the other websites we have developed. Many special thanks to him and to others who have repeated his interest and commented on our treatment of TSP along the way.
~Copernicus Group
John P. Meehan
Leader
1:15 p.m. EDT 9/4/2010
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