The first half of the year is now over for investors in the Thrift Savings Plan (TSP). While there have been days in the stock market with significant gains or losses, how are investors faring at the mid-point of 2015?
So far, despite unsettling financial news from Greece, and the overall losses in June, the results for the first six months have not ended with major gains or losses for the year.
With the exception of the G fund, which ended the month with a small gain, all of the TSP funds were down in June. The best performing fund so far in 2015 is still the I fund with a return of 6.52%. That is a good return but, over a 12 month period, the I fund is still down 3.95%. Over a 12 month period, the C fund has provided the best return of 7.50%.
Moreover, the lifecycle funds are all down for the month. The lifecycle (L) funds are a mix of stocks and bonds and, with bonds in the F fund showing a loss, a very small gain for the G fund and losses in all of the underlying TSP stock funds, even the mixture of investments in the L funds showed a decline.
Here are the results for all of the TSP funds for June, for the year-to-date in 2015 and for the past 12 months:
| G Fund | F Fund | C Fund | S Fund | I Fund | |
|---|---|---|---|---|---|
| Month | 0.17% | -1.07% | -1.93% | -0.71% | -2.80% |
| YTD | 0.96% | 0.05% | 1.26% | 4.96% | 6.52% |
| 12 Month | 2.09% | 2.32% | 7.50% | 6.53% | -3.95% |
| L Income | L 2020 | L 2030 | L 2040 | L 2050 | |
|---|---|---|---|---|---|
| Month | -0.33% | -0.97% | -1.28% | -1.46% | -1.66% |
| YTD | 1.39% | 2.24% | 2.63% | 2.91% | 3.22% |
| 12 Month | 2.68% | 3.15% | 3.45% | 3.68% | 3.69% |
Underlying much of the volatility is the financial and political situation in Greece which is still on-going and affecting stock markets around the world, particularly in Europe.
On top of that, much closer to home, the financials from Puerto Rico are also unsettling to investors as the government of this U.S. commonwealth publicly stated it won’t be able to repay debts it has accumulated over the past decade. Moreover, according to the Wall Street Journal, as the economy in Puerto Rico has gone downhill in the last few years, migration to the U.S. mainland has gone up, shrinking the tax base even further.
Puerto Rico’s economy is a mess. Population has fallen 4.7% since 2010. With a large government bureaucracy, rampant tax evasion, a large welfare state that discourages working (the share of the working-age population on disability is about 50% higher than in the 50 states), it is not clear how the country will emerge from its economic hole. It is not clear how this will impact investors in the U.S. although, looking for any silver lining there, the situation is not as dire as it is in Greece. Puerto Rico does not have a banking crisis as Greece does because its banks have federally insured deposits and access to federally insured mortgages.
Stocks In Last Half of 2015
Halfway through 2014, the S&P 500 index (the index on which the C fund is based) was up 6.1%; this index gained 11% for 2014 while the C fund gained 13.74% for 2014.
Despite the lackluster stock market returns in 2015, and despite the mix of financial problems around the world, many analysts still anticipate positive stock returns by the end of the year although not as high as in 2014. On a positive note, in the 10 prior instances when stocks have the smallest gains midway through the year, the S&P 500 has gone up an average of 6% over the next six months.
No one knows, of course, if that average will prevail again in 2015. Long term investors would be well advised to ignore screaming headlines that appear in the news each day and, instead, focus on following a long term financial plan instead of reacting to headlines displaying negative short term events. As the annual rates for all of the TSP funds show over time, investors have fared very well in the TSP in the long run despite the occasional losses. Trying to time the market by reacting to possible changes usually results in losses or reduced gains for most investors.
TSP investors who want to track their investment results over time can do so using TSPDataCenter.com by setting up your own investment portfolio and following your investment results. There is no charge for this free service.
