🧠 Retire Smarter by Thinking Like a Bad Investor

August 18, 2025

Most federal employees think the path to a successful retirement is paved with “smart moves.”

But what if you could win by embracing the same mistakes bad investors make — just more strategically?

The truth is, human psychology gets in the way of almost every TSP decision.

But if you understand your natural biases, you can design a retirement plan that works because of them, not in spite of them.

🔍 Quick Exercise: Which “Bad Investor” Are You?

Note the one that feels most like you — and then read the flip.

  1. Loss Aversion 😨 – terrified of losses

  2. Overconfidence 😎 – sure you can beat the market

  3. Herd Mentality 🐑 – follow the crowd

  4. Hyper-Monitoring 👀 – check balances too often

1. Loss Aversion: The Fear of Losing

Bad investors panic at the thought of losses. They sell low, buy high, and wonder why they can’t get ahead.

👉 The Flip: Use this instinct to your advantage by setting aside a “safe bucket” inside your TSP — such as the G Fund — equal to 2 years of expected FEHB premiums and living expenses. Knowing you have a cushion helps you stay invested in growth funds through turbulence.

2. Overconfidence: “I Can Beat the Market”

Many investors believe they’re smarter than Wall Street. Spoiler: they’re not.

👉 The Flip: Channel this confidence into consistency instead. Automate your TSP contributions, max the government match, and rebalance 1-4 times per year at most. You’ll outperform most “over-tinkerers” simply by sticking to your system.

3. Herd Mentality: Following the Crowd

When the office chatter shifts to “Did you see the C Fund last month?” it’s tempting to pile in.

👉 The Flip: Treat this urge as a signal to pause. If everyone’s euphoric, it’s probably time to rebalance—not chase. Your herd instinct becomes your built-in contrarian alarm.

4. Hyper-Monitoring: Checking Every Day

Watching your TSP balance daily makes short-term noise feel like long-term risk.

👉 The Flip: Restrict yourself to scheduled reviews — quarterly works well. It keeps you calm and prevents costly knee-jerk decisions.

The smartest retirement investors aren’t the ones with perfect discipline.

They’re the ones who admit they’re human — and set up guardrails to keep themselves on track.

💡 Rule of Thumb to Remember:

“The goal isn’t to beat the market. It’s to beat your future self on a bad day.”

—FWR