TSP Investing for Security or Prosperity?

Mar 21 8:57 AM



#11925 Mar 21 8:57 AM

Security trumps prosperity

March 20, 2009..

By Suzanne Kubota

Senior Internet Editor


"Money," the old adage goes, "doesn't buy happiness," but it turns out that financial security can make you happier.

A recent Princeton study "found a powerful link between concerns over financial security and satisfaction with one's life."

To that end, Certified Financial Planner Arthur Stein tellsFederalNewsRadio, it's time for feds to make a decision about theirThrift Savings Plan: "Decide whether current trends are going tocontinue indefinitely, or whether current trends will change, revert towhat's normal."

Making that decision will then tell you what you need to do.

If you think the current trends are going to continue,by which I mean declines in the stock market despite the bump-up we'vehad this week, then naturally you would want to be switching money intothe G-fund.If you think that the world is eventually going to return tonormal, then an investor would want to reallocate his or her portfolioso they have the appropriate amount invested in stocks that they thinkthat they should.And of course one advantage of reallocating now is that you'reselling high and buying low, which is how you make money in the stockmarket. For the TSP, that would mean that you would be transferringsome money from the G and the F funds, the bond funds, into the C andthe S and the I funds.

And if you're "extremely nervous", as Stein puts it, consider "insteadof reallocating their current portfolio... at least change where theirnew investments are going."

If you're worried about the market recovering so hard that inflation will kick in, Stein has three suggestions:

You wanna pay off credit card debt as quickly as possible; You want to get rid of any variable rate loans you have like a home equity line of credit; You want to do everything you can to refinance a variable rate mortgage into a fixed rate mortgage.

The real key to happiness, is "not about greed," according to thePrinceton study author. "It's about knowing whatever it is you have, beit your McMansion or your motor home, won't be taken away from you."


Contact Us
This Site's Privacy Policy
Google's privacy policies