Ok, I am going to give you a strategy for the Sequester that will begin at 11:59pm this Friday night. I'm also going to do my best to try and not to influence you on what to do but to enlighten you just a little bit in case you have doubts. It doesn't matter what I want to do and it doesn't matter what I do, but it does matter to you what makes you feel comforatable. So here we go.
We in the Government that pay attention to our retirement accounts, TSP, know that we can move money into different funds twice a month and we also know that we can always bailout to the G-fund no matter what for safety. So technically, we have 6 moves a month. I know, I know, we can only move money twice a month and that is what the rules say. But just wait for it.
What if your first move was 100% g-fund to 50-c and 50-g? Then your second move in a month, you distributed your funds, 25-c, 25-s, 25-i, and then 25-f? So now we have no money in the g. We spent our 2 moves or have we? Next day you decide to bail from the f, so login to TSP and submit, 25-c, 25-s, 25-i, and 25-g. Yes they will take it. I did it. Then move four, 25-c, 24-s, 50g. Fifth move, 25-c, 75-g and finaly 100-g. That makes 6 moves. Ok, you learned something. You just have 2 moves to move money into funds other than the g, but you can always bail to g one at a time. Do not get confused though, 2 moves is 2 moves no matter what those 2 moves are. So if your first move is 100% G to 100% C and then later you move 100% C to 100% G in the same month, you are done until the next month. Get it?
Come Friday 11:59AM, notice I said AM, is you last chance to bailout and put yourself safely into the g-fund before the deadline for the Sequester. Friday is the 1st of March so this does not work. We need to spend our move into the G in the month of February and save our 2 entry moves for March. So, if the Sequester scares you and if you want the security of zero loss, why not make a move Tomorrow, Thursday February 28th by 11:59AM to 100% G-fund? Then after the Sequester is in full swing, you will know and have a idea of how the Stock Market is going to react. If it goes up 1,2, or 3% in the long term it will mean nothing. But if you lose that amount money, your going to be pissed off.
So there it is. If you have any fears or reservations, tomorrow by 11:59am is the move to G-fund.
I would also like to give Mike Michalik and little credit for planting this seed in my mind because of his question to me. Thanks Mike.
Thanks for posting this. I transfered everything from L2040 to G about 1 week before the sequester thinking the very same thing. I did it right before the debt limit impasse as well and it worked great! Moved my shares back over to L2040 after they dipped in response, then rode the quick recovery all the way to the bank (figuratively). But not being terribly savvy in these things it's nice to know others are thinking about the same strategy.
ReplyDeleteWell done. Baby sitting our retirement account should be a requirement that is pushed on us in the beginning of our careers but hardly even of us do because of our age and we will live forever syndrome. I'm glad you monitor yours and now work on having a repeatable entry and exit plan.
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