TSP investors have been having a wild ride so far in 2007. Perhaps it is best if investors don’t try to calculate the amount of money in their TSP funds each day. The ups and downs may give you an ulcer on days when your retirement seems to be drifting further away because your retiremment funds are dwindling.
Here is some good news for those who do not follow the TSP returns every day. Despite the daily ups and downs, your TSP investments are all up in March with the exception of the F fund. And, despite the concerns of many analysts, international stocks (the I fund) gained more than any other TSP fund for the past month and the past twelve months. Investors have been justifiably concerned that a slowing U.S. economy would have a ripple effect and impact overseas stocks. But most foreign markets steadied by the end of the first quarter, leaving investors with hope that the four-year international stock market rally will continue for awhile.
Here are the results for the primary TSP funds:
|Last 12 Months||5.05%||6.60%||11.83%||9.30%||20.22%|
As you can see in the table, the safety of the G fund has a price: It has the lowest return of any of the TSP funds. 5.05% is not a bad return for the past twelve months but a return of more than 20% will leave investors with considerably more money.
For those investors who have decided to diversify their investments through the lifecycle funds, here are the results for these funds:
|Last 12 Months||12.57%||11.64%||10.82%||9.00%||6.94%|
Investors seeking safety, security and income may want to take note: The income fund for the lifecycle series has a much better return than the G fund over the past 12 months.
Concern about subprime loans in the American housing market has continued to cause concern for for American and foreign stocks. Subprime loans are loans given to American borrowers with shaky credit ratings. These loans are more risky and have a higher default rate–especially when the economy gets shaky. Moreover, these concerns can spill over into foreign stocks because Americans buy such large quantities of foreign products, so there is a ripple effect for overseas stock markets.
The worries about these loans and the American housing market have not gone away. Perhaps the worries will prove to be unjustified but look for more volatility in your TSP returns.
In the meantime, you can breathe a big sign of relief. The quick fall of stocks in late February proved to be temporary. Your TSP funds have caught up and moved ahead from a temporary setback.