C Fund Turns Positive in 2020

In what has been a volatile year, the TSP’s C Fund has turned positive in 2020 despite a dramatic downturn in March.

C Fund Now Up in 2020

It may turn out to be a short-lived fact that provides some emotional relief to investors in the C Fund of the Thrift Savings Plan (TSP), but the C Fund is now up for the year at the close of the market on June 8, 2020.

The C Fund, which is the most popular stock fund in the Thrift Savings Plan, was up almost 13% in April. (The G Fund is the most popular TSP fund overall but it is not a stock fund.) The C Fund went up another 4.76% in May. But, at the end of April, the C Fund was still down more than 9% in 2020.

C Fund Still Down After April and May

At the end of May, despite a good return for the month, the C Fund was still down for than 5% for the year.

The reason the C Fund was still down at the end of May was the result of the dismal returns in February (-8.04%) and down again in March (-12.4%).

Human nature being what it is, and the importance of money in enjoying a comfortable retirement, some TSP investors panic when the market drops significantly as it has done this year. The reason for the drop may not make any difference. Whether it is due to the COVID-19 panic and pandemic, international world events or other unpredictable occurrences, the stock market will occasionally drop dramatically. Sometimes it stays down for months or years.

For those who invest for the long term, a significant drop may be a good time to invest more money available for this purpose. For some who may try to time the market or just get a sinking feeling in their stomach when they look at the dropping value of the TSP, a sinking market is a time to sell stock funds and move into the G Fund. And, as always happens, a number of TSP investors cashed out of TSP stock funds when they started dropping earlier this year.

Take a Deep Breath

It is likely the C Fund will again turn negative in its returns for 2020.

2020 has been a very unusual year for stock prices as a result of the virus which led to locking down the country. The lockdown resulted in a huge drop in employment and will ultimately result numerous bankruptcies for businesses.

It is also a national election year so politicians of all stripes are seeking TV time to point fingers at electoral opponents and to try and gain a political advantage.

Politics and TSP Investments

Your retirement is your business. While federal employees have a big advantage over most Americans with a defined pension plan, the TSP will have a big impact on your financial health after becoming a “former federal employee” or “retired federal employee”.

While many federal employees have strong political preferences, it is wise to put aside your voting preferences when it comes to investing for your financial future.

Some people thought President Obama would be a disaster. Regardless of how an individual may view his accomplishments or lack thereof, pulling money out of the TSP stock funds during his terms of office would have had a huge negative impact on your TSP balance.

Likewise, some thought the election of President Trump would lead to a financial disaster if they left their money in the TSP stock funds. Any TSP investor who dumped the stock funds based on political preferences missed out on big stock market gains under this Republican president.

The TSP Is Your Personal Responsibility

Investing in the stock market is your personal responsibility.

We hear from readers who always put their TSP investment in the G Fund because it is “safer” than stocks. We also hear from readers who regret selling stocks after a big drop and wonder if they should buy back into the stock funds after prices have recovered. (Also known as “selling low and buying high”.) We also see notes from readers that “if “X” is elected, I am selling my TSP stock funds”.

Those are choices any TSP investor is free to make and the results are yours to enjoy or to regret. Many readers would be well-advised to discuss their investment goals with a financial advisor. Some just select the appropriate lifecycle fund and let it ride to retirement.

If history is any guide, making financial decisions based on politics or emotions of the moment is usually a bad move. Instead, take a deep breath, consider your long-term goals, develop an investment plan for your retirement investments and stick to it. Rebalance periodically as necessary to keep your diversification goals in place.

For those who still have money in the TSP stock funds, you can congratulate yourself and take pleasure in knowing the C Fund has recovered its value – at least for the moment.

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