A Word From Scott

scottgrimesI, Scott Grimes, help people help themselves in regard to their investments.

To manage investments, one needs to have the interest in doing so. You also need the time, temperament, and talent to do so. Very few people possess these requirements. If you have these attributes then you may not need my service. However, if you do not possess these attributes, then you may be interested in a free guide as to how to leverage your results from your TSP account.

Most people do not realize that simply having assets makes them investors. And if they do not take an active role in the investment process, the quality of their financial lifestyle can be greatly diminished.

Many people begin work and blindly invest in their retirement plan, barely aware of it at all, until the day of their retirement. Unfortunately by then, there have been many missed opportunities for improvement. The returns that could have been earned are squandered.

By blindly investing in a retirement plan, people are setting it on “automatic pilot” and forgetting it. Whether they realize it or not, they have adopted the “buy and hold” philosophy as their investment style. They ride the market up and down, losing when it drops and gaining when it rises. They forego thousands in profits that could be realized through actively managing their investments. Sometimes they realize that they need to take action. But they do so with disastrous results, as they either don’t have the time or don’t have the knowledge to take advantage of the opportunities available to them. Studies have shown that the average individual investor earns only 52% of the market return because, when action is taken, it is driven by either fear or greed, or both. This results in an untimely move of assets within the account.

As an illustration of how proper and active investment management can assist you, think of your TSP account balance as being on an elevator. We all know that the market ultimately goes up and breaks new highs. But occasionally, it takes dips as well. Consider this: You are on the 5th floor of a building and your goal is to get to the 20th floor. If the elevator goes down to the 4th floor first, or down 20% from where you currently stand, is it not wise to save time and step off of that elevator? It would be wise to catch another elevator going up to the 10th floor, for example, so that you will be heading in the right direction. While considering this illustration, remember your time is money. By buying and holding, you are, in essence, going from the 5th floor back to the 4th floor, while your intermediate goal is to get to the 10th floor.

Illustrated by a real case scenario in 2000, the S&P 500 dropped 34% (within the TSP that is the C Fund). At that time, using technical analysis, we were able to exit the C Fund and enter the F Fund (bonds). During the time that the S&P 500 was dropping 34%, our bonds were gaining 9.2%. That was a difference of 43.2% in performance in just one year. Do you know how long it was before the “buy and hold” investors fully regained the 34% that they lost (to get back to the 5th floor)? It was March of 2006! That is correct: six years.

In the meantime, in 2002, we invested in the I Fund (which tracks the Morgan Stanley EAFE index) and gained another 42% by the end of that year. Again, while most of the people were stuck between the 3rd and 4th floor, we were on the 10th floor doubling our value.

So here we are, on the 10th floor in 2007. By evaluating and responding to the signals our TSP investments presented, we were able to get out of the stock market again in December of 2007. At that time, we used a mixture of treasuries (G Fund) and bonds (F Fund) to protect our gains. Again, we got off on the 10th floor, while on our way to the 20th floor. Meanwhile, the “buy and hold” investors took the elevator back to the 3rd floor while trying to get to the 20th floor. Simply put, the financial crisis (now known as the Great Recession) hit! After the March 2009 market bottom, a lot of people returned between the 2nd and 3rd floor. By then, they had lost 50% of their portfolios. In the meantime, we had gotten on another elevator toward the 20th floor and were well on our way to arriving at our destination.

So how long before those “buy and hold” folks got back to the 10th floor? In other words, how long before they recouped their 50% loss? If you guessed 2013 you were right: five years later. When I retired from government service in 2011, we had arrived at the 20th floor, adding an average of 18.7% a year to our retirement funds.
I must repeat the old adage, “time is money and money is time.” Consider those who were close to retirement but had lost over 50% of their portfolio and could no longer afford to retire.
Consider your current plan and situation. Are you still working? Would you prefer assistance to get to that 20th floor more efficiently?

If so, just register for your free subscription to the daily blog and periodic advice as to how, when, and where your retirement assets need to be adjusted. You can take advantage of upward market cycles and minimize risk during downward cycles.

The TSP offers five different investment options that all have their own reward and risk. They generally do not all perform well (or poorly) at the same time. My free service to you will help you navigate in and out of each, as they will benefit you the most at any given time, over time. To summarize, I monitor your investments so you will not have to, and I make sure that you never get stuck on an elevator going to the basement!

If you are entering retirement or have already retired, please be aware that I work closely with  Registered Christian Investment Advisor who is a Representative at Raymond James Financial Services. He has agreed to advise anyone in our group free of charge. Be aware that there is no pressure to utilize his services. He has plenty of business and chooses to help folks for the same reason that I do. That said, he is great to work with and has assisted many folks in our group with their retirement needs. Please don’t hesitate to contact me at KyFan1@aol.com should you wish to request an introduction.