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Seasonal Buying And Selling Technique For Investment Money And US Federal Employee TSP 401k Retirement Accounts
By John | August 5, 2010
“Sell in Might and Stay Away” Words to reside and invest by? I do not know who coined the phrase but I did a bit of investigation and yes this method would have worked out for you is you had implemented it over the life from the TSP retirement account. Of course we know past performance doesn’t guarantee future results but there’s something here that makes this investor think that just maybe there is certainly something more for the story this time.
You can find five money 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 (based on the S&P 500) has averaged 12.61556% per year. Within the months October through Might 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 investment C Fund on May 31 and moved all your cash into the F Fund and then moved all of one’s cash from the F Fund back for the C Fund on September 30th, you would have realized a three.616667% per year increase inside your fee of return over 18 a long time. Let me repeat this, a three.616667% annual improve based 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 Might was 9.24% although it’s June through September average was an appalling 7.02% loss. Utilizing the same technique as above, our average pace of return would have jumped from an anemic 2.22% to a healthy 11.38%. Which is an amazing increase of over 9% depending on just two trades per year.
Since 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 May possibly, with gains of 14.05% for the S Fund and 10.368% for the I Fund annually during individuals 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 inside the S and I resources and four months inside the F Money, you would have realized additional gains of 6.336% for the S Fund and five.378% for the I fund brining your rate 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 for a poor summer. Needless to say that could be a result with the pepperoni pizza I just ate.
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