Seasonal Buying And Selling Strategy For Investment Resources And US Federal Employee TSP 401k Retirement Accounts

Posted on September 18th, 2010 in Uncategorized by iptools  Tagged , , ,

“Sell in Might and Stay Away” Words to live and invest by? I don’t know who coined the phrase but I did a bit of investigation and yes this technique would have worked out for you is you had implemented it over the life with the TSP retirement account. Needless to say we know past performance does not guarantee future results but there is certainly something right here that makes this investor think that just maybe there’s something much more for the story this time.

You will find five resources available in the Thrift Savings Plan.

The C Fund is based on the S&P 500
The F Fund is designed to match the bonds in the Lehman Brothers U.S. Aggregate (LBA) index.
The G Fund invests in short-term U.S. treasuries
The S Fund follows the Wilshire 4500 index
The I Fund follows the EAFE index

From its inception in 1988 through the end of 2005 the C Fund (depending on the S&P 500) has averaged 12.61556% per year. Within the months October through May possibly it averaged12.87611%. From June through September it averaged -0.26056%. For the same 18 year period, the F Fund averaged three.356111% for the four months June through September. Had you sold all of the stock C Fund on May 31 and moved all your funds into the F Fund and then moved all of your money from the F Fund back towards the C Fund on September 30th, you would have realized a 3.616667% per year improve inside your pace of return over 18 years. Let me repeat this, a three.616667% annual boost depending on only two trades per year.

From 2001 through 2005 the C Fund (depending on the S&P 500) annual average was only 2.22%. Its average gain October through May possibly was 9.24% whilst it’s June through September average was an appalling 7.02% loss. Utilizing the same method as above, our average pace of return would have jumped from an anemic 2.22% to a healthy 11.38%. That is an amazing improve of over 9% based on just two trades per year.

Given that its inception in 2001 the S Fund (depending on the Wilshire 4500 index) has averaged 9.314% and the I Fund (based on the EAFE index) averaged 6.56%. They show the same pattern of gains October through Might, with gains of 14.05% for the S Fund and 10.368% for the I Fund annually throughout those people eight months. They also continue the S Fund pattern of losses Jun through September, a 4.736% loss for the S Fund and three.808% loss for the I Fund. Using the same technique of eight months in the S and I resources and four months inside the F Resources, you would have realized additional gains of 6.336% for the S Fund and 5.378% for the I fund brining your fee of return to 15.65% for an S+F method and 11.938% for an I+F method.

What do you think about this? Join the TSPcenter forum and let me know. My gut tells me we are in to get a poor summer. Of course that could be a result with the pepperoni pizza I just ate.

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