Seven Straight Months of Gains in Your Thrift Savings Plan

Investors in the Thrift Savings Plan have seen their returns reflecting a positive return for a number of months now. September continues the same upward trend.

Investors in the federal Thrift Savings Plan still have reason to celebrate after looking over their investment returns for September.

For the 7th month in a row, you have a positive return in your TSP portfolio.

For example, the C fund is up 3.74% for the past month, the S fund is up 5.94% and the I fund is up 3.79%. Moreover, the year-to-date returns are also up. The C fund is up 19.45% so far in 2009; the S fund is up 28.94% and the I fund is up 27.34%.

Even better news for those who have investment money in the I fund, the fund is now showing a positive return of 1.55% over the past twelve months. As you can see from one of the charts in this article, all of the TSP stock funds, including the I fund, were previously down for the past twelve months.

Unfortunately, the C and S funds are still down over the past twelve months. The C fund is showing a negative return of -6.79% and the S fund is down -5.23% over the past twelve months.

The L funds have also fared well as you might expect from the returns of the underlying funds.

All of the L funds have a positive return for September and for the year-to-date. The only fund with a negative return for the past 12 months is the more aggressive L2040 fund which is down 0.54% for the 12 month span although it is still up 20.49% for 2009.

Some TSP investors may want to carefully review these returns and consider their current allocations. The lifecycle funds are designed to automatically provide a balance of the underlying TSP funds with the balance allocation being determined by your approximate retirement date. In other words, the L 2040 fund is more aggressive and the L Income fund is much more conservative.

So far in 2009, the most conservative lifecycle fund has a return of 6.86% while the G fund has a return for the same period of 2.19%. And, for the past twelve months, the G fund has returned 3.07% while the L Income fund has a return of 3.56%.

October can be a volatile month for stocks. For example, October 2008 was the worst month for stocks in 21 years. (See October 2008: Worst Month in 21 Years) And, as some readers will recall,  October 1987 when the American stock market dropped 22.68% after experiencing the biggest one-day percentage decline in stock market history on October 19th, 1987 (22.61%).

For those who may be wondering, it is unlikely that October 2009 will be anything like the worst months in stock market history. On the other hand, it would be foolish to assume the stock market will continue to go up on a steady pace. Since we cannot predict how the market will behave, most TSP investors would be well advised to balance their investments with stocks (the C, S and I funds) and bonds (the G and F funds) to be able to sleep better at night.

After a few straight months of gains, it is reasonable to expect another dip in stock prices as part of the normal cycle of events.

For now, take a look at your TSP investment portfolio and celebrate your seven straight months of positive returns.

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