2007 is off to a good start. If you are actively considering retirement, which apparently many current federal employees are doing, you may like the appearance of your TSP totals–especially if you have been a little more aggressive in your investment choices.
The official return rates for the Thrift Savings Plan (TSP) for the month of January are now in. All TSP investors are going to be happy as the January rates are up for all funds with the exception of the F fund. And, looking at the bright side, the F fund did not go down for January and it is up 4.31% for the past 12 months.
For the past 12 months, the return rates for international stocks continue to lead the pack. They are up 20.57% for the past year and up 1.31% for the month of January. The C fund is now in second place in return rates for the past 12 months as it is up 14.52%. The small company fund is still looking good as it is up 11.46% for the past twelve months. Moreover, the S fund beat all others for January with a return rate of 3.14%.
Here are the rates of return for the five underlying TSP funds.
| Fund | G | F | C | S | I |
| January 2007 | 0.43% | 0.00% | 1.53% | 3.14% | 1.31% |
| Last 12 Months | 5.00% | 4.31% | 14.52% | 11.46% | 20.57% |
The Lifecycle funds also had a positive return rate for January and for the past twelve months. The best rate of return for the most aggressive fund (the L2040) lags behind the two leading TSP funds for the longer time period. As stocks are up, the most aggressive funds continue to have the best return rates for investors while the most conservative funds are trailing while providing more of a safe haven for future retirement funds.
The L2040 fund returned 1.53% for January and it is up 13.94% for the last twelve months. The L2030 fund is up 12.80% for the past twelve months and a return rate of 1.42% for January. At the other end of the scale, the L Income fund is up 0.63% for January and up 7.09% for the last 12 months.
Here are the most recent return rates for the lifecycle funds.
| Fund | L2040 | L2030 | L2020 | L2010 | LIncome |
| January 2007 | 1.53% | 1.42% | 1.22% | 0.89% | 0.63% |
| Last 12 Months | 13.94% | 12.80% | 11.84% | 9.65% | 7.09% |
TSP investors who are getting closer to retirement and who may be keeping their retirement funds in the G fund to preserve their investment may want to take a closer look at the L Income fund. It is consistently coming out ahead of the G fund while still providing a relatively safe investment. No doubt, this is one reason the TSP officials are contemplating seeking a change in the automatic investment options for investors by moving the default account from the G fund and, instead, putting money into the appropriate lifecycle funds.
To put this into perspective, in 2006, the L Income fund finished ahead of the G fund in nine of the 12 months for the year. And, for all of 2006, the L Income fund provided a return of 7.59% while the G fund provided investors with a return of 4.93%. If you are a retiree, or plan to be in the near future, you may be looking at withdrawing about 4% of your TSP funds per year. The difference in return rates between the two funds could provide substantially more income for retirees in the likely event that the differential continues overthe life of a long retirement.
