How It Works

How does the TSP SafetyNET system work?

 There are two concepts which we subscribe to in any SafetyNET program. 

Concept 1 

 There is no need to be invested in the stock market all the time. Why people insist that it is important to be invested all the time is probably a holdover from some old textbook or advice they received from their parents.  One should try to capture positive returns in upside markets, while avoiding a good part of the losses from falling markets. Why, but why, would you insist on being invested in a market that is clearly declining and in trouble short and mid-term?  Was it not obvious that there was a crisis in 2008 when investors were advised to “buy and hold” as the markets tanked?  We know a lot of the financial media is fully invested in the idea that “nobody can predict the market”, but there is no need to predict, one must proactively respond to circumstances – particularly when , markets are in a poor environment.

Our investment managers, using sophisticated marketing indicators, pull money to the sidelines when indicated.  They may place part the money in money market funds or switch to investments which counter certain market swings. Then they wait out the storm.   Once this model reverses course, the managers move money back into the market in accordance with the second concept.

Concept 2 

Invest in the performing area of the market and avoid the soft spots.  The mania of index, passive investing has conditioned people to accept terrible investments mixed in with good ones as a solid investment strategy.  A major concept we follow at TSP SafetyNET is to help reduce the risk of loss in down markets.   

Did you know you need to make a 100% gain to get back to even after you lost 50% on your investment?  Not losing huge amounts of money in down markets is a key component of a good management system. Think of it this way.  When autos came of age would you have insisted on investing in “horse and buggy” companies. When computers became widely available did you really want to own typewriter companies? And yet this is being sold as “investment advice” by a majority of financial advisors.
The technology used by our managers analyzes the stock market on a continual basis to identify strongly performing areas and recommends a switch from one fund to another if appropriate. By focusing on the sectors, during times of low risk, our system delivers much better performance than the popular, but not so great, strategy of “own everything, good or bad, at all times, good or bad”, which underpins most investment advice. 

How can the SafetyNET program recommendations help me in pursuit of my financial goals? 

In addition to the time-tested marketing indicators we use, the primary advantage to the program is full transparency.  You know where you and your TSP stand at all times. You have access to weekly video reports giving you ongoing information – telling you what is actually relevant in the markets in addition to your quarterly reports.                                   

The largest retirement system with additional benefits for being a federal employee

One thing to be aware of is that TSP SafetyNET system is available during your federal career and also when you retire.  You are not required to remove your TSP funds when you retire and there are many benefits to keeping your funds in the TSP. 

During your working years, you can be assured that your TSP is one of the best retirement systems available. As you work with federal retirement benefits specialists, you will find not only is there a major benefit in how the retirement funds you invest are matched but also you have the ability to take advantage of special tax treatment for your contribution through the use of a Roth.

Learning how to take advantage the TSP portion of your federal benefits package is one of the reasons to work with benefit specialists with a history in helping you take best advantage of your TSP and we encourage you to only work with financial professionals working in a fiduciary capacity.

Continuing to use your TSP after retirement

Many people are approached by brokers encouraging them to transfer their TSP to outside brokerage accounts.  We encourage you to take time to determine the advantages or disadvantages to moving out of your TSP – especially if you are encouraged to do so because you are being offered professional management.

One of the reasons to keep your money in the TSP is the cost of fees in many outside brokerage accounts.  Because the TSP is literally the largest retirement system in the world, the government program has been able to have an underlying fee advantage.  The underlying cost of management inside the TSP funds are typically significantly lower than the underlying fund management cost associated with the typical brokerage account.  You will want to ask yourself if moving from one type of underlying fee structure is a good idea.  Check with a professional who has long term experience with both the TSP retirement system and also has a history of using other outside brokerage related programs.  The suggestions can be implemented in virtually all brokerage accounts or retirement plans.
And depending on which manager used, you have access to weekly video reports, regular weekly information telling you what actually is relevant in the markets, and you get quarterly reports.

The key is working with a manager who does the work for you as a fiduciary.