If investors had known in January 2020 that a pandemic from China would spread through much of the world, early predictions of more than two million Americans dying from the virus, governments closing businesses down for weeks or months, schools closing for much of the year, and the federal government printing and borrowing enough money to create another 3.13 trillion dollars in debt, pessimism among investors would have been rampant. Probably many would have sold all of their stocks and invested in gold or put their money into certificates of deposit.
Fortunately for investors, most did not have a pessimistic view into the future.
Fastest Race Ever to New Stock Market Highs
Despite all of the events mentioned in the first paragraph of this article, stocks soared in 2020. After plunging into a bear market—which means a drop of at least 20%—a new bull market appeared. The new bull market quickly hit new highs in 126 trading days. According to the Wall Street Journal, the average time to claw back from such a sharp drop in stock prices is the equivalent of about six years.
For investors in the Thrift Savings Plan (TSP) that held on to their stock funds, the year proved to be profitable.
For 2020, the C Fund was up 18.31%, the S Fund was up 31.85% and the I Fund was up 8.17%. While these were not record-setting years, in a year with so many unpredictable and unfortunate events occurring, the returns are startling.
Results for All TSP Funds
|||G Fund||F Fund||C Fund||S Fund||I Fund|
|||L Income||L 2025||L 2030||L 2035||L 2040|
|||L 2045||L 2050||L 2055||L 2060||L 2065|
While many Americans have had a bad year in 2020, TSP investors have made out well as their current or future retirement income is likely to be higher as a result of the stock market returns this year.