Tsp question

[savedmother]

@tn8710 Okay, I will. The C fund tracks Standard & Poor's 500 (S&P 500) Stock Index. If you look at the historical chart for the S&P 500, in 2000 it was around 1500 points. It steadily drops to under 900 in 2002-2003, and does not reach 1500 points again until 2007. Then it drops again sharply to under 800 by 2009, and does not reach 1500 points again until 2013. So two periods back to back where there was a period of 5 or more years where your investment would have lost significant value.

This page also shows that same information, specific to the C fund. https://www.tspfolio.com/tspcfund

 

[tn8710]

@savedmother And when does it reach 70% of it's original value? Is it within 5 years?

Withing 2-3 years it's above 1100 so they didn't lose 30% like you claim. Not even close to 50%

Again yes you can lose money. It is not likely you will lose 30-50 percent over 5 years.

But if you are so risk adverse you can't stand the thought of losing a single dollar go put your money in the bank.

 

[savedmother]

@tn8710 I don't think you really understand the point myself and the other user are trying to make. Nobody would argue against investing in general. You absolutely should invest in funds such as the S&P 500, for long term goals like retirement in 10+ years.

However, for short term goals, such as getting close to retirement and saving to buy a house, you should not keep that money in the stock market. I suggested a very appropriate place to safely store money for short term goals, which are I funds.

 

[tn8710]

@savedmother 5 years is not what I would call short term. If he is talking 5 months yea. Or a year.

5 years is a long time.

Look at me. I started saving for my house down payment. I've invested 50k into two index funds I started in 2019. Right now im at 110k. If a year from now the day before I pull it out the market somehow crashes 50% I'll have more than I would have if I just put it into a checking account. And that's only 2 years. I don't have a secret formula, I'm not lucky. I literally put my extra money into a sp and nasdaq index fund.

 

[savedmother]

@tn8710 5 years and less is considered short term when it comes to financial goals. If you really want to nit pick the naming of lengths of time, then some people consider 3-10 years "intermediate term". Either way, the majority of financial advisors will all say that money that you plan on using in 5 years or less should not be kept in the stock market.

Good for you for your returns. I don't really care. The past two years have been part of one of the largest and longest bull runs. Just about every index fund has had large returns. That's great for your retirement and other long term accounts. It doesn't justify putting money that is part of a short term goal into the stock market. You have a really high risk tolerance, and it paid off during a bull run. That doesn't mean that it is a good decision for someone else to put their down payment for a house into the stock market.

For OP and anyone else reading this, do not listen to myself or this other user. Do your own research, see what actual financial experts recommend for saving vs investing, and what they consider "short term". Surprise, just about every respected financial advisor and website you can find will consider 5 years or less to be short term, will even specifically mention saving for a down payment as a short term goal, and will recommend keeping those funds in bonds and high yield savings accounts.

https://www.investopedia.com/articles/investing/030217/best-strategy-shortterm-savings-goals.asp

https://www.nerdwallet.com/article/investing/invest-savings-short-intermediate-long-term-goals

https://www.fool.com/investing/how-to-invest/saving-vs-investing/

 

[tn8710]

@savedmother I agree with doing his own research. It would be irresponsible for me to tell him he could get 30-50% increase in his money.

 

[makubexx]

@resjudicata An alternative question to ask would be: are you flexible and willing to postpone buying a house if the market has a downturn in 5 years?

There isn’t anything inherently wrong with investing money with a short time horizon provided you’re flexible in the timeline.