Managing your funds

Spaf

Honorary Hall of Fame Member
The Kingdom of TSP

Managing your funds: When to hold, when to fold.

Using a IFT and acting quickly when the market turns out of favor can avoid losing a large portion of your principal. When you get out, your funds won't be tied up in a losing position. You will be able to reinvest another day.

It's ok to hold funds as long as the price is advancing. When prices are locked in a trading range or falling, it's time to fold, and get out.

Preserving capital is of the highest priority.

..Protecting your principal is No. 1

..Don't let a large profit turn into a small profit.

..Try not letting a small profit turn into a loss. And,

..Don't let a small loss excalate into a large loss.

The following is the Percentage gain that is required to recover from losses:
A loss of: ||requires a recovery % gain of:
5%...........5.2%
10%.........11.1%
25%.........33.3%
50%.........100%
75%.........300%
100%........Doom

Things to consider in Fundamentals: Markets are more global. Rising energy costs will affect all markets. Stocks can advance from oversold conditions, but they struggle in overbought conditions, and typically have to fall in a correction to gather steam to continue upward.

Things to consider in TSP: The TSP is a saving-for-retirement-fund. At least with minimum investment and matching grants the G-Fund + matching will yield about 10%, with zero risk. The bond and equities funds involve more risk, in these the money needs to be managed.

Rgds, and be careful!...:) ...Spaf
 
Very notable information

Spaf,

I only wish I could practice what you preach - but over the years I've developed the investing style of a cycle rider. Rider up and rider down. When the objective is to accumulate with dollar cost averaging the direction is of secondary consequence. When I hit 40,000 shares of a fund maybe I'd be more open to pistol shooting the ranges. As we currently sit the fund I accumulate will cost me more the next contribution date - I'd rather hold for a small pull back and cheaper pricing - but it ain't gonna happen I'm afraid.

Dennis
 
Spaf said:
When you get out, your funds won't be tied up in a losing position. You will be able to reinvest another day.

Being "out" also means you're losing when those that are "in" are winning.
 
Clarification

bkrownd said:
Being "out" also means you're losing when those that are "in" are winning.

The reference was to a losing position, one that is declining. You want to vacate a declining position asap, and not hold and hope it will reverse. Thats where small losses become big losses.

Rgds...........:) ............Spaf
 
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