S Fund Leads the TSP Pack in October

October was a good month for TSP investors. Here is a summary of the results.

The latest returns from the Thrift Savings Plan are out and investors should continue to be pleased with the results.

All TSP funds had a positive return for October. And, despite all the publicity about large company stocks hitting new highs in the past several weeks, the best return was not the C fund. Instead, the S fund finished with a return of 4.99% for the past month. It is also up 16.93% for the past twelve months. Compare that to the safety of the G fund with a return rate in October of 0.45% and a 12 month return of 4.97%.

Take a look at the charts below. If you have all of your investments in the G fund, you may want to consider switching to a lifecycle fund to take advantage of possible stock increases during the years before your retirement. Compare the returns for the past year by looking at the G fund to the income fund. Both are conservative investments but the income fund has a return of 7.8% for the past year while the G fund is under 5%.

Having said that, the C fund did not do poorly either. It is up 3.27% for October and 16.32% for the past twelve months.

Here is a quick summary of the funds and how they performed last month:

Fund G F C S I
October Return 0.43% 0.73% 3.27% 4.99% 3.87%
12 Month Return 4.97% 5.22% 16.32% 16.93% 27.54%

And the lifecycle fund investors should be happy as well. The funds did not keep up with better performing stock funds last month but there was a good return just the same.

Fund L2040 L2030 L2020 L2010 LIncome
Oct. Return 3.28% 2.94% 2.51% 1.79% 1.04%
12 Month Return 17.41% 15.91% 14.36% 11.71% 7.80%

TSP investors planning to retire in the next couple of years may feel better when looking at their TSP balances increase this year as the nest egg for retirement is building up and may make you feel more secure before taking the leap into the world of the retiree.

And next year may be a good one for investors if the past is prologue. Stocks often go up after midterm elections, which occur two years into each presidential term. According to the Wall Street Journal, since 1950, the average return for the Dow Jones Industrial Average from the November of a midterm-election year through the following October has been 18.6%.

What happens if the Senate stays in Republican control and the Democrats take over the House? Probably not much will get done in Congress. That is sometimes good for stocks though–perhaps on the theory that the elected legislators can talk to each other and to the press but no harm will be done. The legislators will get their salaries and contributions from lobbyists, and the country may be safer and the economic climate more stable if they leave the rest of the country alone.

In the meantime, enjoy your recent TSP profits, regardless of what the future may hold for your TSP investments.

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