Don’t fall for TSP timing advice


For investors planning to rely on their invested resources to provide cash flow in retirement, market timing is a bad idea. There is so much wrong with it that it’s difficult to know where to begin or end, but I’ll try to hit the high points here.

Market timing in a Thrift Savings Plan account is electing to deviate from the optimum asset allocation scheme for a period of time. The optimum allocation scheme is the one that will support your lifetime financial goals with the minimum possible risk. The optimum allocation scheme takes into account all known risks, including the risk of changes in fund share prices.

If determined and used properly, the optimum allocation scheme will reliably support your cash flow needs in retirement without the need to predict or react to sudden market moves. Combined with your spending plan, it should anticipate and leave a cushion sufficient to absorb these moves.

The reason for taking this approach is that it’s impossible to reliably predict the future of fund share prices or to compensate for unpredicted changes after they have occurred, which is what market timing pretends to be able to accomplish it.

If owning a particular combination of TSP funds will produce a particular return over a period of time, then the only reason for deviation would be to try to improve on that return. However, deviation has two possible outcomes: The resulting return will be either better or worse, but there is no way to know which of these is more likely. No one has found a way to reliably beat the optimum allocation in your TSP account when risk is taken into account. Trying to do so using market timing is a speculative endeavor. It’s a bet against the odds at worst, and a blind bet at best.

Various systems for timing your TSP investments are being promoted as the solution to a problem. They include a variety of methods, but all share in common some way of providing you with a signal to change your asset allocation scheme that is unrelated to your specific circumstances. Without exception, they are being promoted by sources that are either unscrupulous or ignorant, and they are part of the problem faced by TSP investors, rather than a solution.

Believing that there is some systematic way to predictably beat a market without exposing yourself to greater risk demonstrates a profound lack of understanding about how the TSP’s funds, and the markets they represent, work. Even if this logic doesn’t convince you that such systems are nothing more than 21st century snake oil, it should be obvious that the promoters of these strategies have absolutely no understanding of your circumstances, goals or resources, and aren’t in any position to advise you in how you manage your money.
If, like most TSP investors, you are relying on your TSP account to provide you with predictable income in retirement, you owe it to yourself to give your account the diligence and care it deserves. Trusting your account to advice from someone who doesn’t know you, hasn’t done the work to understand your situation, and who won’t take responsibility for the outcomes you enjoy, or endure, is never a good idea.


About Author

Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to and view his blog at

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