TSP Returns are in: Best Return Over 12 Months is 62.5%

TSP returns for the past 12 months are excellent. One fund is up more than 62%. The Fund in second place returned 40.29%.

TSP returns are still positive so far in 2021 (with the exception of the F Fund) after computing data for TSP returns for the month of May.

TSP Funds With Best Returns

In a new twist, the I Fund had the best monthly return of any other fund in the Thrift Savings Plan (TSP). While the I Fund is still lagging behind the S and C Funds for the last few months and the year-to-date, those with investments in the I Fund will be glad to see a resurgence of this Fund in May.

The S&P 500 went higher on the final trading day of the month. This was the fourth consecutive month of gains. Along with the index it follows, the C Fund edged up slightly for the month. The C Fund has also had a positive return for four straight months. It is also up 40.29% for the past 12 months and is up 12.61% so far in 2021.

That puts the C Fund as the leader among TSP Funds for the year to date so far. The S Fund is a close second coming in at 11.60%. The S Fund is way ahead on a 12-month cycle though with a gain of 62.54%.

The I Fund is ahead for the month, as noted above and has a very respectable return of 39.15% for the past 12 months. It is up 10.58% so far in 2021.

TSP Returns for All Funds

G FundF FundC FundS FundI Fund
12 Month0.96%-0.29%40.29%62.54%39.15%
L IncomeL 2025L 2030L 2035L 2040
12 Month9.22%n/a24.77%n/a29.97%
L 2045L 2050L 2055L 2060L 2065
12 Monthn/a34.66%n/an/an/a

Number of TSP Participants

There are now more than 6.2 million TSP participants. Most of these are in the FERS system with 3,672,556 participants. These FERS participants have an average balance of $173,574 in the TSP. There are 740,126 FERS employees with a Roth plan and they have an average balance of $20,736.

The number of TSP participants from uniformed services is now up to 1,354,939. Their average TSP balance is $37,033. 602,414 uniformed services members have a Roth account and their average balance is $15,654.

Among all TSP participants, there is now an average balance of $120,401. The average Roth balance for all TSP participants with a Roth account is $15,777.

Looking for Higher TSP Returns?

At the end of April 2021, 27.5% of participants’ TSP allocation of their investment dollars was in the G Fund. Astute readers may take note in the TSP returns chart above that the fund with one of the lowest return rates was the G Fund.

Why is that? For the most part, the G Fund is considered the safest TSP Fund. It is the Fund that never loses money—and no one likes to lose money.

The percentage of money invested in the G Fund has gone down over time. For example, at the end of November 2018, the percentage of TSP assets in the G Fund was 32.5%. In other words, TSP investors have been gradually changing their investment allocation.

Another perspective is that those investing in the G Fund are losing money but in a different way. The G Fund returns are often less than the rate of inflation. We are now in an investing environment in which inflation is going up. The stock market may go down for the rest of the year or it may go up. We do know that inflation is going up—few just do not know how much it will go up.

For those seeking safety, the L Income Fund has a return rate over the past 12 months of 9.22%. The G Fund has a return rate over the same time period of 0.96%. We cannot predict the future. We do know that investing in the G Fund over the past 12 months left these investors with less money than the would have had by investing in another relatively safe TSP Fund: the L Income Fund.

It is possible the L Income Fund will lose money over the remainder of the year. As displayed in a FedSmith article last month, at the end of April the L Income Fund had about 22% of its money invested in the TSP stock funds. There is always some risk of losing money in a short time frame by investing in stocks. There is also the possibility of making more money by investing in stocks over a longer time period.

The objective of the L Income Fund is to achieve a low level of growth with its major emphasis on preserving assets. TSP’s management has created the allocation of stocks and bonds with this in mind.

For those looking to have a long retirement after your federal career, it may pay to look at all of your investment options in order to maintain the standard of living you want to achieve during your retirement years.

We wish all of our readers success in their TSP investments in coming months and years!

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