Which of your TSP funds have performed the best since the beginning of the year?
But, in the eternal quest for more information, several readers have recently asked for the best performing TSP fund for the year. So, with a cup of coffee in hand, and a pen and paper nearby to write down the latest financial statistics, and a pocket calculator sitting on the desk to reveal the secrets of the financial market returns, we have done the research for you.
No question, it has been a volatile year for the stock market. But there is also no question that your TSP investments have done well this year. For those nearing retirement and who happen to have six figure accounts (i.e., more than $100,000) in your TSP funds, your retirement savings have gone up. But the funds in which you have chosen to invest have performed differently. That is not unexpected but it leaves each investor with choices to make about how to best prepare for retirement.
So, in order to enable some readers to break out the champagne or to head for the closest Starbucks and order the largest and most expensive cup of coffee available to consume while you dream about hitting the beach or the mountains during your retirement years, here are some statistics that will make all TSP investors feel good–even though some will wish they had put more money into different funds.
Based on the roaring news headines of the past few weeks (Dow Hits New Highs!), you may think that the best performing fund for the year has been the C fund because American stocks have been on a tear. But that conclusion would not be correct.
The best performing TSP fund in the pack: the I fund. It has a return of about 18% so far in 2006. The C fund has not performed poorly. It is up about 12% for the year.
Here is a chart showing the results for each of the main TSP funds for 2006. The percentages have been rounded but this will give readers a good measure of how each of your TSP investments have fared in 2006.
| Fund | G | F | C | S | I |
| 2006 Return | 4% | 3% | 12% | 11% | 18% |
| Increase | .45 | .31 | $1.68 | $1.81 | $3.24 |
In effect, regardless of which TSP fund you used for your retirement investments, you will have had a positive return. The reality is that the F and G funds, which are considered the safest funds, will not really provide much of a real return because of inflation. After the inflation factor is considered, the F fund will not be keeping pace with increased costs and the G fund isn’t doing much better. On the bright side, your principal (i.e. the amount you originally invested) is still there and there was little risk of losing it–especially in the G fund.
The increase column shows the amount of dollars and cents each share of the fund has increased in 2006.
But what about the newer funds that started last year. The lifecycle funds are designed to be more aggressive for younger investors who have more years before they retire. So, in a year in which the stock market is up, you would expect the L2040 fund to be the winner. That has been the case. It is up 12% for the year so far in 2006–the same as the C fund has been.
And, for investors closer to retirement who may have put their TSP investments in the L2010 fund, your rate of return has not been bad either. It returned about 8.5% for the year–considerably better than the G fund or the F fund. The reason for the difference is that the lifecycle funds all have some investment in stocks as well as in bonds. The result is that those getting closer to retirement have actually done better than the inflation rate without much risk.
| Fund | L2040 | L2030 | L2020 | L2010 | LIncome |
| 2006 Return | 12% | 11% | 10% | 8..5% | 6% |
| Increase | $1.79 | $1.59 | $1.42 | $1.12 | .71 |
As we enter the final quarter of the calendar year, TSP investors can compare the amount available in their TSP accounts as of December 30, 2005, compare how much you have in the accounts as of October 25, 2006 and feel good about your future.
