Ouch! TSP Stock Funds Down Again in February

By on March 4, 2008 in Current Events with 0 Comments

Stocks have continued their downward trend for February and the falling prices are reflected in the latest returns for the Thrift Savings Plan. As was the case in January, the TSP stock funds and all of the lifecycle funds are down for the latest month.

This means that the TSP stock funds are down for four straight months and down for six of the last nine months (the exceptions were August, September and October).

Notice that the F fund is the biggest gainer among the core TSP funds for the month, the past 12 months and the year to date. Some investors may look at bonds as a boring investment. But, when they are adding to your future retirement plan as the F fund has done recently, boring is not such a bad thing. We sometimes get questions from readers wondering about the different funds, including whether the F fund is a risky investment. This article on "Is the TSP’s F Fund a Risky Investment" from several years ago shows that some questions never change and there are advantages to a consistent investment strategy.

Here is a quick summary of the results:

 

Fund

G

F

C

S

I

-3.28%

-0.66%

Feb. Return 0.24% 0.16% -2.05%
YTD Return 0.57% 1.93% -9.06% -8.19% -9.13%
12 Month Return 4.66% 7.52% -3.59% -5.85% -0.22%

 

LIncome

L2010

L2020

L2030

L2040

-0.22%

-0.59%

-1.25%

-1.51%

-1.80%

-1.19%

-2.65%

-5.11%

-6.15%

-7.07%

3.50%

2.80%

0.57%

-0.37%

-1.11%

Fund
Feb. Return
YTD Return
12 Month Return

 

What everyone would like to know, of course, is when will the stock market turn around. There are plenty of problems still abounding in our system with concerns about housing prices, inflation, political uncertainty about the future of our tax structure and how changes will impact investments fear of a recession, etc. to keep stock market prices volatile for awhile.

Several readers have recently asked why they do not get a statement about the dividends and capital gains with their TSP funds and some question what is done with the money that is made from dividends and capital gains.

The answer is that the TSP credits dividend income each business day. This income is then reflected in the TSP’s C, S, and I Funds’ share price. And, notes the TSP "The daily change in TSP share prices reflects all investment income (realized or unrealized capital gains or losses, dividends, interest on short-term investments, and securities lending income) net of TSP administrative expenses and investment management fees."

Hang on for the ride. There is likely to be more volatility in the stock market in coming months–with no guarantees if the final returns at the end of 2008 will be up or down. Keep in mind that when the market does turn, it may do so quickly and that TSP participants who have pulled out all or a large percentage of their investments in stock funds may lose out when the market goes back up.

It may make you feel better to take a look at the annual returns for the various TSP funds for a longer term perspective of your retirement investments.

 

 

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters onĀ federal human resources.

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