Be Happy: You Have More Money Than You Did Last Month

TSP stock funds are all up for November.

This has been a good month for federal employees. In addition to eating turkey and pumpkin pie, a new pay raise is on the way and your TSP retirement investments are looking very good.

A few days ago, we asked readers “Are You A Millionaire Yet?”

Most federal employees are not and will never be a millionaire (defined as having a million dollars or more in net assets exclusive of your residence).

But some will be. And those who reach the magical number will likely do so because they maximized their investments in the Thrift Savings Plan–and we don’t mean those investors who stuff all of their retirement funds from each paycheck into the G fund because it is safer.

This month is a good example of how your investments can soar in the stock market. The S fund is up 6.96% for the month of November. The I fund is up 6.16% for the month of November. The C fund is up 4.08% for the month of November.

And it gets better. The I fund is up 23.79% in the past 12 months. The S fund is up 15.62% for the past 12 months. The C fund is up 12.83% for the past 12 months.

In effect, if you were wise enough to diversify your stock fund investments into the three stock funds you have available to you through the TSP, you have a lot more money than you did just one year ago.

Keep in mind, those of you who have chalked up gains of 12 to 23% occurred in a time when America is fighting a war in Afghanistan and Iraq. Oil prices have been soaring. America’s trade deficit has been setting records. We have been through a caustic election in which any action taken by the administration was seen in a negative light and diminished America’s image in the eyes of the world.

And those investing in stock funds still made a ton of money despite all the negative events investors could use as a reason for putting all of their money into the super safe G fund or just not investing for retirement at all.

And how did those investors do with their G fund investments? The fund is up 0.28% for November and 4.42% for the year. The F fund is down 0.86% for November but still had a positive return of 4.35% over the past 12 months.

For very rough comparison purposes, an investor who had $100,000 in the G fund would have about $105,000 one year later. That same investor with $100,000 in the I fund would have about $124,000 one year later.

But how can a bond fund (such as the F fund) go down? Isn’t that a safe investment?

It is a safe investment and TSP investors should diversify their investments among the options available to them. Both stocks and bonds can go down. (And stocks are likely to drop faster than bonds when the stock market hits its next downturn–and there will be another downturn.) As demand for bonds dropped in recent days, the underlying value of the bonds dropped. As the value of the dollar has dropped, some foreign investors are not putting as much money into American bonds.

For more information, see Is the TSP’s F Fund a “Risky Investment”?

The bottom line for November: be happy. We read a lot of negative comments from federal employees about their job, their pay and their benefits. But the government’s TSP program (along with the health benefits program) is often cited as a model for the rest of the country. Those who are wise enough to take advantage of it and invest as much as they can throughout a federal career will likely enjoy a pleasant retirement.

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 on federal human resources. Follow Ralph on Twitter: @RalphSmith47