Calculating TSP Returns
By Ralph Smith
Thursday, June 26, 2008
What is the best way for TSP participants to calculate their year-to-date returns on their TSP fund performance?
As many readers have undoubtedly noticed, June has not been a good month for the stock market. Actually, June has been an awful month for the stock market as the TSP stock funds are down across the board.
We will cover the actual returns for the month of June in the next several days in a separate column.
Whenever the market goes down as it has in the past several weeks, we start getting email from readers who are unhappy about the TSP returns reported on the FedSmith site. There are probably a couple of reasons for this unhappiness and we have tried to cover the two major options for reporting year-to-date TSP returns.
The email that some readers send in usually read something like this: "The TSP shows the I fund is down about 3% for the year. Your site shows the I fund is down more than 9% for the year. Why are you providing inaccurate information to your readers?"
As an investor, if I look at the returns for my investments, I want to know how my funds have done as of today's date and not necessarily how my funds have performed as of three or four weeks ago. The reason for this is because the most current information seems to me to be the most useful in making decisions about current or future investments. The most current TSP information is on the front page of our site each day.
The daily newsletter that we send to readers also shows the most current year-to-date TSP returns as calculated by our computer program sometime during the night. In a month like the one we are currently experiencing, the year-to-date returns for the TSP are lower (much lower!) than the year-to-date returns displayed as of the end of last month. In effect, readers who see they have lost more money than they expected are disappointed when they see the most current year-to-date returns by looking at the FedSmith site.
For those readers who prefer to see the returns as of the last day of the previous month, we also provide that information in the TSP corner. To show the distinction we also include this statement at the bottom of the table showing the TSP returns in this location: "YTD returns as compiled by the TSP each month."
In effect, to borrow a quote from a famous commercial, "You can have it your way." Check out the most recent returns at the top of the front page on the FedSmith site or check out the returns for the most recent month in the TSP corner.
The figures will be different. Both sets of figures should be accurate but they are displaying different information for you to use. Understanding the difference will make the information more useful for you.
So, if the information on your TSP funds for the month of June seems unfavorable, that is because the data is not favorable for the month. That will not make many readers feel happy about their retirement investments but withholding the data does not change the reality of the recent poor performance of stock funds.
We hope you find the TSP corner and the daily TSP quotes to be useful. Feel free to make suggestions through the comments section if you care to do so.
© 2008 FedSmith Inc. All rights reserved. This article may not be reproduced without express written consent of FedSmith Inc.
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