Starting Off on a High Note: Which TSP Funds Had the Largest Gains in January?

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By on February 1, 2018 in Pay & Benefits with 0 Comments

Plant growing on top of three individual stacks of coins that get taller from left to right depicting financial gains and growing wealth

More Stock Records Set in January

January was another good month for investors in the Thrift Savings Plan (TSP). Just how good is notable.

The S&P 500 index, on which the TSP’s C fund is based, went up 1.2%, on Friday. This was the 14th record high in January. These are the most records for the S&P 500 in a single month since June 1955. The C fund is now up 26.40% in the past 12 months and it surged 5.72% in January.

But the C fund is not the TSP fund with the largest gain in the past 12 months. That notable achievement goes to the I fund. It was up 5% in January and it was up 27.99% for the past 12 months.

Among the lifecycle funds, the L 2050 is up the most for the past 12 months (21.42%) and it was up 4.15% in January.

TSP Fund Returns for January 2018 and Past 12 Months

Here is how all of the TSP funds performed in January and for the past 12 months:

G Fund F Fund C Fund S Fund I Fund
Month 0.20% -1.14% 5.72% 3.34% 5.0%
12 Months 2.33% 2.40% 26.40% 19.59% 27.99%

 

L Income L 2020 L 2030 L 2040 L 2050
Month 1.10% 1.84% 3.12% 3.66% 4.15%
12 Months 6.71% 10.72% 16.38% 19.01% 21.42%

What Comes Next?

According to MarketWatch, previously, when the Dow Jones Industrial Average (DJIA) has gone up 5% or more in January, that index has closed the year with a gain 83% of the time—or 20 out of the past 24 times. In January 2018, the DJIA went up 5.8%.

The S&P 500 has a similar track record to the DJIA. It has finished the year with positive gains 78% of the time—14 out of 18 times—when it has a January return of 5% or better. As noted above, in January 2018 the S&P 500 index was up 5.72%.

For those playing the odds in investing their future retirement funds, that could mean more gains in the stock market for 2018.

Will The January Barometer Hold in 2018?

Despite this favorable omen, there are no guarantees, and plenty of things that could go wrong to cloud this rosy scenario.

One author on investing writes: “The market is at levels that are, to put it bluntly, statistically stupid.” He also observed: “although the U.S. market could continue moving higher and bring in more investors who want to join the party they’ve missed, the odds are good the worst is yet to come.” In other words, if stock prices drop back to the mean, there will be a significant loss of value in stocks and TSP investors will feel the financial pain along with other investors.

Investors often sell their stocks when the market is significantly down. They often (usually) buy stocks when the market is up significantly. Buying high and selling low is obviously a recipe for financial disaster.

For many investors, the buy and hold rule works out, meaning they just invest money on a regular basis without regard to whether market is up or down. They may also re-balance the stock and bond balance in their portfolios periodically. This works out over time as the stock market generally goes up over longer time periods.

Some investors try to time the market by selling stocks when the market is up and buying when it goes down. That sounds easy, but it is not. When will the market top occur? When will it bottom out? No one knows, and guessing right when both buying and selling stocks is extremely difficult and requires extraordinary luck.

We do know that stocks will go down again. They always do, sometimes for a long period, before they go back up. Each investor should consider how will you react (or plan ahead) for when stocks start to drop for a period of time.

TSP Investor Actions in December

In December 2017, TSP investors transferred more than $2.7 billion out of the G fund and another $384 million out of the I fund. The fund with the biggest gain was the C fund which had an influx of almost $1.6 billion and the S fund with an influx of $931 million. That was fortuitous as the C fund and the S funds went up significantly in January as noted above. The lifecycle funds had an influx of $420 million while the F fund took in $207 million in transfers.

TSP Plan Balance and Average TSP Balances

According to the Federal Retirement Thrift Investment Board, the TSP is now investing more than $542 billion and more than $9 billion in Roth accounts.

Here are the average balances for TSP investors:

Total Roth
FERS $138,190 $11,692
CSRS $142,240 $17,892
Uniformed Services $22,241 $6.691

TSP Statistics

There are now 5,170,761 participants in the TSP as of December 2017. 2,260,000 participants are in FERS and 61,000 participants are in CSRS. 303,000 people are active participants with no current contributions. 269,000 TSP participants are under FERS and receive agency contributions only.

For 2017, there was a 12% increase in post separation withdrawals over 2016. This was primarily due to a larger number of TSP participants reaching retirement age. And, as of December, the TSP processed 36,500 roll-in checks totaling $1.33 billion, a $140 million increase from the previous year.

January 2018 was a great start for TSP funds. We wish all TSP investors continued success in 2018.

© 2018 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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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

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