2015 was not a stellar year for investors. The volatility and tumult in the markets is reflected in the returns for the Thrift Savings Plan (TSP) funds.
The biggest loser for the year: The S fund with a return of -2.92%. Foreign stocks also did not make investors happy with a yearly return of -0.51%.
With the exception of the G fund, all of the TSP funds were also down in December. The G fund provided a monthly return of 0.18. It also had the best returns for 2015 with a positive return of 2.04%.
Overall, U.S. stocks had their worst annual performance since 2008. The S&P 500 index fell 0.7%. Despite this, the C fund, the TSP fund based on the S&P 500 index, finished the year in the black with a return of 1.46%, at least in part because dividends are added back into the fund. The result is that the C fund finished 2015 with seven straight years of gains. 2015 had the lowest gain for this fund since 2008, the year in which the C fund lost almost 37% of its value.
Here are the results for all of the funds in the Thrift Savings Plan for December and the yearly return for 2015.
|G Fund||F Fund||C Fund||S Fund||I Fund|
|L Income||L 2020||L 2030||L 2040||L 2050|
Some TSP investors will look back to 2008, which was a disastrous year for the stock market, for guidance on how to prepare for 2016. In 2009 there was a large bounce back that was largely unexpected. The C fund, for example, made a big come come back and went up almost 29% in 2009 after losing almost 37% in 2008, followed by another six years of positive returns. Many analysts do not see a similar result for stocks in 2016.
Here is how an article summarizing expectations for 2016 stock returns from the Wall Street Journal:
“While most Wall Street equity strategists still expect gains for U.S. stocks this year, they also once again expect higher levels of volatility than in years past. Of 16 investment banks that issued forecasts for this year, two-thirds expect the S&P 500 to finish 2016 at a level less than 10% above last year’s close….”
The current bull market in stocks has been a long one. Including dividends, the S&P 500 index has provided investors with a return of 249% since hitting a low point in 2009. At this stage of a bull market, there are likely to be wild swings in stock prices throughout the year before or while the market decides to continue up or turn into a downward trend.
TSP investors investing in the stock funds should be prepared to see their share prices go up or down more than we have seen in the last few years. Those that see their share prices drop, and then decide to sell their shares as a result, are locking in those losses just as many investors did at or near the bottom of the market in 2009. Those that locked in their losses often missed a good portion of the stock market gains when the market bounced back.
A volatile year in the stock market can create opportunities for some investors. Of course, no one knows what 2016 will bring to the funds in your TSP portfolio. Those who like to have a financial plan for their retirement may want to read the article on 2016 Financial Resolutions to help sustain your financial future.
We wish all of our readers the best of luck in making their investment decisions.