Up and down stockThe roller coaster that has been the stock markets over the past few weeks has kept some of us awake at night while others were re-thinking their ability to retire. Many retirees and others who are saving for retirement have a significant portion of their savings tied up in investments through the Thrift Savings Plan (TSP) or other retirement accounts. However, unless you need the entire sum of your savings tomorrow, you should rest easy and take this opportunity to revisit your investment strategy to learn from the past and prepare for the future.

The disappointing part about investment news is the enormous pressure the media has placed on individual investors and their perception of investing. The market indexes are everywhere! They flow on the bottom of practically every newscast, they are consistently updated on public radio, and they are shown on the homepage of every news source. The fact of the matter is that most individual investors do not have a significant portion of their savings inside these reported indexes. The Dow Jones Industrial Average (DJIA), the most reported stock market index around the world, is only made up of 30 large U.S. companies. The entire U.S. stock market actually is made up of over 4,900 exchange-listed companies (companies sold on major exchanges like the NYSE, NASDAQ, etc.) and thousands more that are unlisted and trade “Over-the-Counter.” Yet individual investors have been trained to cheer when the DJIA goes up and worry when the DJIA goes down.

Most retirees and retirement savers have their savings invested in Funds, which are an investment that holds many different stocks and nets the aggregate performance of the group of stocks. Your TSP is an example, there are six different funds to choose from and seven different “target” funds that are a different mix of the original six depending on your retirement year target. True, the C-Fund (part of the TSP), which tracks the performance of the S&P 500, is negative for the year – if you look at the returns year-to-date. However, the historical performance of the C-Fund, as stated from the TSP website, is 10.43% since 1988 when it was established.

The historical performance of the C-Fund and this year’s performance provide great insight and a good lesson. It’s very important to not become shortsighted about retirement savings. Saving for retirement is a long-term activity and so is investing for retirement. Worrying about a single year’s performance only creates sleepless nights, but the long-term historical performance of the stock market has proven, time and time again, that patience and long-term savings yields positive results.

Planning for the long-term does not mean that there are no choices to be made. A “set it and forget it” mind set can be dangerous. Engaged and informed saving and investing has proven to be more beneficial than simply choosing a set of investments and never reviewing their performance. It is important to consistently revisit your strategy, whether it is with an investment professional or on your own. Understanding your money is half the battle to being an informed consumer.

As for the stock market’s recent dramatics, understand that there’s more to your savings and investments than the day-to-day market movements. There is no reason to loose sleep if the DJIA drops – unless you need all of your retirement money tomorrow. Pay attention to your investments and savings, but take a long-term view. Understand that history never is a guarantee of future results and investing your money involves risk. However, time and time again, history has proven that the overall U.S. Stock Market has yielded positive results.



Jonathon Rowles                                                                                                                      Captain, USMC (Ret.)



Disclaimer: (have to do it) – This blog should not be considered financial, investment, legal or tax advice. Consult your licensed financial professional, tax advisor or legal counsel. This blog is for educational purposes only.


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