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Managing Your TSP Retirement

Managing a retirement account is often the last thing anyone thinks of doing. And for those with a government TSP (Thrift Savings Plan) it is probably even further down the list.

Although a TSP only contains five funds from which to choose, this very factor makes managing the account even more important.

WHY, because there is less wiggle room. The opportunity for success is equally as dramatic as that of losing it all.

A middle ground would be to divide your retirement money into each of the TSP funds equally. You won’t seem dramatic growth, but you could end up with steady upward steps that should at least beat inflation. The challenge with such a basic diversified plan is that you may not generate enough money to live upon when you reach retirement.

Since you are limited to no more than two trades per month in your TSP account, managing your retirement means:

TSP funds are private and not traded on the regular stock market exchanges. This means you need to watch funds or ETFs that closely resemble your TSP funds.

Once you know which symbols to watch, or you look at the performance via your TSP login, you can adjust your holdings to meet your objectives. You can focus on growth or safety or by diversifying amongst the funds you can weight your holdings towards your preference of growth or security.

Various charting software, even free online software, can give you an indication of what is happening with each of your funds.

Investment software based on technical analysis can take the basic information a step or two further and in seconds provide recommendations based not just on the movement of your funds but how they compare to each other and even to the stock market as a whole. This type analysis, dubbed relative strength, can lead you to the best performers at the current time and also tell you when to sell or switch funds.

Selling, many investors forget, is the only way you actually make money. You have no gain, no profit, except on paper until you sell a fund. Switching from one fund into another locks in the profit gained from the first fund while giving you the opportunity to grow your money further with the fund that is now moving ahead with greater relative strength.

Or, you may simply want to sell from the more ‘growth’ fund and transfer part or all of the money into a more stable but inflation beating fund to secure that money for the future.

Regardless of how you go about handling your TSP retirement account, simply doing nothing and let it rest in the default fund will barely keep your money even with inflation (kind of like stuffing it in a coffee can for a future date) when prices for everything, yes everything will be higher. Taking a few minutes a week or a month can mean the difference between enjoying retirement or being stressed out with every bill that comes in the mail.

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