The stock market has been flirting with 11000 for the Dow Jones Industrial Average this year. February was not a stellar month as the market absorbed the news from Iraq and political disputes about our ability to deal with national security issues as well as a variety of economic news from housing starts to the amont of personal income for American households.
By the way, personal income rose 0.7% January according to government statistics, in part because of the raise for federal employees and the raise for Social Security recipients.
Despite some of the bad news though, C fund investors saw a small positive return for February. The S and I funds are down for the month but still show a strong return for the past twelve months.
And those conservative bond investors can feel good about their decision to keep at least some of their money in bonds. Investments in the TSP bond funds fared better than stocks as both the G and F funds were up for the month.
Here are the latest TSP monthly return figures:
The February 2006 monthly returns for the lifecycle funds are:
As you can see from the figures this month, the funds that are on top for a few months are not likely to always stay there. Small company stocks and international stocks have been on a big run for some time. (Go to the monthly returns section of the TSP corner to see a broader picture of how each fund has fared.)
For February, the Dow Jones Industrial Index did better than the index on which the C fund is based (the S&P 500 index) but it is too early to tell if there is a fundamental change in the stock market or if the smaller and international stocks will shoot up again in March.
As always, your best bet is to cover all bases by spreading out your TSP investments through a variety of the funds available to you. For those readers who do not want to spend the time and effort to decide how to diversify, consider the lifecycle funds as your asset diversification is handled for you based on a pre-determined formula based on the stage of your federal career.