Our primary strategy (simply called “TSPKey“) is suitable for most investors. We also have our Low-Risk strategy. It’s designed for those needing access to TSP funds within a couple of years. Low-Risk places a greater emphasis on protecting your principal.
The trade-off is that Low-Risk’s long-term returns are lower. While our TSPKey strategy has relatively low volatility based on backtesting, Low-Risk is even less volatile.
Both TSPKey and Low Risk are based on strategies we used in the past. One is the Legacy strategy, which uses the market’s trend and economic data. The other is the 50-Day strategy. It’s named that because it’s only invested in stock funds for slightly over 50 days each year. These are 6 to 9-day periods when stocks have historically performed the best.
Our new approach, starting in 2021, invests 50% in stock funds when the market’s trend and economic data are favorable (Legacy). When we enter a “50 Day” period, it moves to a 100% stock allocation. This way we receive some gains during all bull markets, but only put 100% in stocks when all indicators line up (strong market trend/economic indicators AND positive seasonality).
Low-Risk is based on the same logic, but only invests 25% in stock funds most of the time. It invests 75% in stocks during brief times when conditions are the most favorable.
This page shows the backtested returns of TSPKey, Low-Risk and a couple of TSP funds.