The Standard Portfolios

Standard TSP portfolios are static, passively managed "buy-and-hold" portfolios that never change with changing market conditions. By comparison the TSP Pilot Portfolio is a dynamically managed portfolio whose fund allocations change with changing market conditions. A fundamental difference in investment posture. Our demonstration TSP passive "lifestyle" portfolios are divided into three general risk/reward categories conservative, moderate and aggressive.

While following these standard "lifestyle" TSP portfolios would likely provide a major performance improvement for most Thrift Savings Plan contributors, they all fall FAR short of the optimized, fund timed TSP Pilot Portfolio in terms of both risk and return.

The basic idea of a "lifestyle" portfolio is one that you can largely buy-and-hold and manually re-balance over time. The theory is that as you approach retirement, or more specifically the time when you plan to draw down your TSP account, you would want to take on less risk by moving from a more aggressive portfolio (more stocks than bonds) to a more conservative portfolio (more bonds than stocks).

Unfortunately, this assumes that because you are younger you would (by definition) want to adopt a more aggressive investment posture, and conversely, as you age, you would want to adopt a more conservative investment posture. In our opinion this one-size-fits-all approach is too circumspect and limiting for TSP investors. However, it does somewhat simplify business for the plan managers and administrators.

For example if you are 10-20 or more years from retirement, you may want to take a heavier position in the stock funds. In fact had you been invested in those stock funds during 2000-2003 you would have lost up to 47% of the value of your TSP account! Just because you are younger doesn't necessarily mean that you would WANT to assume that additional market risk. We believe YOUR TSP portfolio should match YOUR investment risk/reward profile regardless of your time to retirement.

Don't test the retirement waters alone. Put your TSP ship a league ahead by requesting your FREE ISSUE or by SUBSCRIBING at our special reduced rates today!