There is good news for investors in the Thrift Savings Plan (TSP): the Dow Jones Industrial Average index of stocks has had the best performance in stocks since World War II under a first-term president when measured from Election Day through the 100th day in office.
The Dow index has gone up 14.22% since Donald Trump won the election on November 8, 2016. His campaign promised a number of policies favoring stock market investors, including tax cuts, deregulation and boosting spending on America’s infrastructure.
The U.S. stock market ended the month higher with a boost from strong corporate earnings. The S&P 500 index (the index on which the TSP’s C fund is based) is only about half a percentage point from hitting all-time highs. The S&P 500 ended the week up 1.5%. The gain for the S&P 500 index in April was 0.9%. The C fund finished better than that with a gain of 1.03%.
Best and Worst Performing Funds in April
The International Stock Fund was the best performing TSP fund again in April. It had a return of 2.62% for the month and it up 10.16% for the year-to-date. It is up 12.91% for the past twelve months.
The best performing fund over the past 12 months is the S fund. The small cap fund has returned 21.83% over the past twelve months.
The fund with the lowest monthly return in April was the G fund. It returned 0.20%. It is also the fund with the lowest returns for the year-to-date with a return of 0.78%.
The fund with the lowest return for the past twelve months is the F fund with a positive return of 1.12%.
Latest Rates of Return for All TSP Funds
Here is a summary of the returns for all of the TSP funds for the month of April, so far in 2017 (YTD) and the past 12 months.
| G Fund | F Fund | C Fund | S Fund | I Fund | |
|---|---|---|---|---|---|
| Month | 0.20% | 0.81% | 1.03% | 1.15% | 2.62% |
| YTD | 0.78% | 1.75% | 7.16% | 5.78% | 10.16% |
| 12 Months | 1.98% | 1.12% | 17.95% | 21.83% | 12.91% |
| L Income | L 2020 | L 2030 | L 2040 | L 2050 | |
|---|---|---|---|---|---|
| Month | 0.50% | 0.76% | 1.07% | 1.21% | 1.34% |
| YTD | 2.24% | 3.69% | 5.24% | 6.00% | 6.69% |
| 12 Months | 4.89% | 8.23% | 11.41% | 13.07% | 14.65% |
Good News About TSP and Federal Retirement
A recent Wall Street Journal article made this observation about the Thrift Savings Plan and the Federal Employee Retirement System (FERS).
Alongside several million U.S. government workers, members of Congress participate in the Federal Employees Retirement System, which wraps their current savings and future pensions in a cushion of comfort that most American workers can only dream of.
Only about 13% of employees nationwide are covered by both a 401(k) and a traditional pension that assures stable, lifelong income….All 535 members of Congress are.
So, the good news for federal employees is that they are in the small minority of Americans with a pension and an retirement investment plan with government contributions.
Warning for Investors in the “Cushy” Federal System
In the same column in the Journal is a quote from a former assistant secretary of labor that future retirees may find of interest. “In the next round of tax overhauls, ‘it’s not really a question of whether retirement plans will get a haircut, but of how much.’ ”
What may happen is that money contributed to 401(k) plans and the Thrift Savings Plan are not subject to current income tax. But, if retirement contributions were treated like contributions to a Roth individual retirement account or Roth 401(k), the money would be taxed before it is invested. The incentive of putting in money now for a current tax break would disappear.
This change would generate about $1.5 trillion for the federal government over the next decade. Savings of this magnitude will certainly get noticed in Congress.
So, what does this have to do with federal employees who invest in the TSP? According to the Journal article:
At a bare minimum, if Congress is going to hack away some of the tax advantages of private retirement plans, it should make matching cuts to the cushy federal system.
‘There should be equal sacrifice. It’d be very hard for them to justify not doing that.’
If and when this change appears to be on track for passing in Congress, we will advise readers.
