TSP Member frustration

Why Most TSP Members Lose Money

Here is the ugly and unfortunate truth…The majority of investors will never make a significant amount of money with their investments. In fact, they are far more likely to lose money over time.

And here’s why…

Since 1994 DALBAR, the nation’s leading financial services market research firm has specialized in investor behavior analysis. Specifically they measure the effects of investor decisions to buy, sell and switch into and out of the stock market.

Their annual report has consistently shown traditional mutual funds have gained approximately 9% a year on average since the study began 20 years ago, when the actual annual return earned by the average investor was only 3.2% – which didn’t even cover inflation in the period.

DALBAR explains…

“Recommendations by many mutual fund companies to remain invested have had little effect on what investors actually do. The result is that the alpha[positive return] created by portfolio management is lost to the average investor, who generally abandons investments at inopportune times, often in response to bad news.”

The core reason the majority of investors fail isn’t due to bad stock advice. It’s mainly because they don’t consider or manage the emotional toll of having their savings at risk. In our experience, unless you’re able to formulate a clear plan for your investing – a plan that’s logical and based on proven historical research – you are unlikely to succeed.

Debunking Historical Stock Market Returns

Here’s the problem and make no mistake it’s a huge problem…

The average historical stock market return falls between 8-12% depending on which method and timeframe utilized in your calculations. But how often does the stock market actually return 8-12 percent???

We went back 145 years and this is what we found…

YearReturn
2015-6.68%
201411.39%
201321.19%
201212.04%
2011-1.48%
201012.32%
200926.49%
2008-37.24%
2007-7.16%
20069.11%
20054.09%
2004
1.31%
200324.03%
2002-23.42%
2001-15.60%
2000-9.68%
199911.12%
199827.50%
199723.78%
199621.02%
199528.56%
1994-4.32%
19936.00%
19921.30%
199124.59%
1990-9.38%
198913.23%
19888.85%
1987-8.98%
198625.21%
198516.79%
1984-0.39%
198310.68%
198218.62%
1981-18.63%
19807.24%
1979-2.36%
19781.10%
1977-18.62%
19761.85%
197525.09%
1974-32.47%
1973-25.79%
197210.58%
19717.00%
1970-1.68%
1969-16.61%
19682.80%
19678.58%
1966-12.53%
19656.32%
196411.57%
196315.61%
1962-7.05%
196114.89%
19601.19%
19593.26%
195833.40%
1957-12.65%
1956-0.08%
195523.56%
195440.88%
1953-3.84%
19527.82%
19519.31%
195016.25%
194912.24%
19482.28%
1947-11.55%
1946-28.55%
194530.65%
194411.28%
194314.07%
19424.96%
1941-23.98%
1940-15.44%
1939-0.89%
193812.10%
1937-36.15%
193625.11%
193546.44%
1934-14.73%
193345.28%
1932-5.31%
1931-42.25%
1930-20.84%
1929-12.67%
192843.47%
192732.34%
19268.35%
192515.56%
192419.82%
1923-3.65%
192222.64%
192115.43%
1920-18.21%
1919-3.83%
1918-7.62%
1917-37.04%
1916-8.82%
191521.13%
1914-11.52%
1913-11.80%
1912-5.00%
1911-0.54%
1910-1.36%
19090.47%
190828.12%
1907-26.78%
1906-7.30%
190517.08%
190423.37%
1903-17.41%
1902-4.96%
190112.09%
190018.76%
1899-14.15%
189822.75%
189712.34%
18961.73%
1895-0.88%
18942.57%
1893-11.19%
1892-5.54%
189121.15%
1890-12.23%
18897.80%
18883.38%
1887-9.16%
18867.30%
188527.10%
1884-8.75%
1883-3.50%
18820.01%
1881-11.50%
188028.46%
187918.31%
187822.79%
18778.52%
1876-21.06%
18754.22%
18744.70%
1873-4.60%
18722.79%
18717.81%

Over the last 145 years, the stock market has returned 8-12% a dozen times. That’s it. Literally 8% of the time the stock market hit this historical benchmark defined by mainstream financial commentators and financial advisors.

However, the stock market returned less than 8% sixty percent of the time. That’s right! Every six years out of a decade the majority of investors were achieving less than the historical benchmark of the overall stock market.

Unfortunately, when investors find themselves underperforming the historical benchmark more often than not they abandon their stock market strategy. While counter intuitive, poor stock market performance is often the most opportune time to capitalize on large market movements while continuing the power of compounding returns.

In order to break away from this self destructive habit and herd mentality we recommend you fully understand these things…

5 Truths About TSP Investing

Glamour Is For The Movies – Investing in the stock market is not glamorous, far from it actually. The stock market is absolutely boring.

Forget About Consistent Returns – Aiming for consistent 20% annual returns is setting yourself up for failure. Accept the fact there will be years where you lose money.

Truly Understand Your Strategy – Stop picking strategies based on their recent returns. Start picking strategies based on their methodology and how well you understand it. Conduct your due diligence and investigate historic returns.

Stop Quitting – If you plan on quitting after losing money then don’t even bother investing. You are almost certain to lose money in the stock market but instead of quitting after a loss, learn from your mistake and grow as an investor.

Beat The Current Market – Instead of competing against the historic average stock market returns of 8-12%, start competing against the current stock market. If the overall market returns 10% aim for achieving 12% and vice versa, if the market loses 15% that year, shoot to only lose 7%.

The sooner you recognize and understand these truths the sooner you will become a better and more informed investor.

TSP Newsletter

While our newsletter follows a proven strategy which delivers above average TSP returns we believe the key difference is the insightful investment education we provide to our subscribers. We believe investor education is far more powerful than any investment strategy because it enables an investor to make an informed decision instead of reacting out of fear or greed.

3 Comments

  • Barbara DeSpain

    Reply Reply October 22, 2016

    There is something surely very criminal about forcing members of the military to sign up for Thrift Savings. My son was career Navy and lost many thousands of dollars due to the fact that YOU do not educate your investors that if they withdraws before a certain age, you will keep a huge amount of their hard earned dollars. You evidently have lobbied Congress to make it mandatory to sign up. Someone needs to investigate you ASAP. I will make it my business to further that.

    • Marvin

      Reply Reply October 23, 2016

      Good afternoon Barbara

      Please understand that our company is not associated with the Thrift Savings Plan in any shape form or fashion. Our company publishes a financial newsletter specializing in the Thrift Savings Plan in order to educate TSP members so they can maximize their profits and minimize their losses.

  • Jim Stevens

    Reply Reply October 27, 2016

    Barbara,
    The Thrift Savings Plan is a retirement account. Money that is invested in it is intended to be used for retirement … defined by the U.S. government as beginning the year an individual turns 59 1/2. It is actually a fantastic opportunity for individuals who serve in the armed forces but don’t stay until retirement, most people are one-term enlistees like myself, to put away some money for retirement that has 35+ years to grow and compound. If your son was/is career Navy, the TSP is something for him to tap into to supplement his retirement from his second career after the Navy. It is not a savings account or mutual fund to be used to get a car or new tattoo.

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