Want to Beat the Market? Stop Trying to Beat the Market

June 30, 2025

Have you ever changed your TSP allocation because a headline scared you?

Market dip? Jump to the G Fund.

Interest rate hike? Dump the C Fund.

Midterms? Ukraine? Debt ceiling?

Something always feels urgent.

But here’s the reality:

Most federal employees who try to “beat the market” end up beating their own returns instead.

Emotion Is the Real Threat—Not the Market

Markets recover.

Your emotions? Not so much.

Every time you sell low, hesitate to re-enter, or tinker during turbulence—you risk locking in losses that only time and discipline could’ve fixed.

This isn’t just theory:

  • Vanguard found frequent traders earn 1.5–2% less per year.

  • DALBAR’s 30-year data shows investors underperform the very funds they invest in—mostly due to timing errors.

Why the Best TSP Investors Are Often the Most Boring

Lifecycle (L) Funds may not feel “customized.”

But they’re designed to protect you from your worst instincts.

Here’s why boring works:

✅ No panic switches. Your fund mix adjusts automatically.
✅ Disciplined risk reduction. You get more conservative over time—without guessing.
✅ Better average returns. Because staying invested usually beats chasing safety.

It’s not about being smarter.

It’s about removing the need to be smart every day.

Before your next fund change, ask:

  • 🧠 Am I reacting to fear—or following a plan?

  • 📉 Did I ever actually gain from moving funds last-minute?

  • 🧾 Do I have a written strategy—or am I winging it based on CNBC?

If those questions hit close to home—you’re not alone.

But now, you can do something better.

👉 Caveat: If you have a proven, repeatable signal that beats L Funds with active management, feel free to continue that way unless it’s psychologically draining. Then consider moving at least a portion to L Funds.

Final Thought

“More money is lost by investors preparing for corrections… than in the corrections themselves.”

—Peter Lynch

So next time you feel the itch to “optimize” your TSP?

  • Pause.

  • Close the browser.

  • Take a walk.

And remember: letting your plan work is a strategy—not surrender.

Best,
—FWR