Retirement Fund Director Seeks to Calm Workers' Nerves

The transfers amount to only a small slice of the more than $218 billion invested in TSP funds at the end of September.

"We have obviously had a very tumultuous market. The month of October in particular has been very difficult," Long said in a telephone interview after the meeting. "We have had expressions of concern by our participants and some anxiety."

The TSP has registered the increased anxiety in the increased activity on its customer service line and Web site. The number of phone calls has been higher than average almost every day in October and was double the average on Oct. 10. Some of those calls came from "people who wanted their hands held," Long said. His letter reminded that the program is a long-term retirement plan and said this is "a time for prudence, not panic."

During anxious times, "there's a general notion that's called in the investment business 'flight to quality,' " he added. "People are flying to quality, leaving investments which have some risk associated with them and trying to move to Treasury bills or gold or anything that is seen as safe."

The G Fund is very safe. It never declines in value. In September, it was up 0.31 percent, almost 3 percent for the year. That's not much, but it looks pretty good compared with the other funds.

TSP officials are quick to note that participants can move money to the G Fund at any time, without the restrictions imposed on shifting to other funds.

Long urges prudence, and that includes reassessing your investment portfolio. For some people, that could include a look at TSP's L Fund, which Long considers a good bet in any market. It diversifies a participant's investment among all the program's funds and tailors the investment strategy to timelines consistent with when an investor will need the money.

For example, the L Income Fund, for those whose older years makes financial risk less attractive, is 74 percent in government securities, while the L2040 Fund, for youngsters, has only 8 percent in that category and 82 percent spread across stock funds.

"People who are retiring or going to start drawing their money out in 2010 have had some (L Fund) loses, but quite frankly, they've been relatively minor," Long said.

And for those who still have many years to go, the drop in the stock market represents a good time to buy.

"For people who are 20 years to retirement," Long said, "this should be seen as an opportunity."

Diary associate Eric Yoder contributed to this column. Contact Joe Davidson atfederaldiary@washpost.com.