The beleaguered common stock fund of the TSP (the C Fund) came back in October with a positive return of 8.7%. Now, in another bit of good news for Federal employees who are saving for retirement, the fund will also be reporting a positive return for November. Stocks have continued going up from their July lows and your C fund investment should see an upturn of about 5.7% this week when the official figures are released.
If you are an investor in this fund, you may have noticed you lost more than 9% of your investment in 2000 and more than 11% in 2001. 2002 hasn’t been too hot either with the fund heading south in 7 of the past 10 months. But, with the second significant advance in two months, your retirement future may be looking a little brighter now.
Why is the stock market going up? Probably several reasons. First, it has been going down for about three years and we are in the longest bear market since the 1930’s. That in itself may be part of the reason for the current move up. Second, the economy is showing some signs of picking up and, third, the election results have probably helped some too. There is speculation that the Republican Congress may end the double taxation of dividends and that would give stock dividends more value to investors.
While we don’t want to minimize the good news, the market still has a way to go to get back to where it was on January 1st of this year. Even with the significant increases we have seen in the past 60 days, the market is down more than 18% for 2002.
Look at the bright side though-the money you put into the fund each month will probably be a very good investment in the long run. Historically, the stock market has provided a good return over time. Trying to guess when to put money in or take it out often leads to financial disaster as you are likely to miss a major upside move in stocks.
Fedsmith.com will provide more information on all of the TSP fund returns for November when the official figures are released later this week.