Latest TSP Factoids from the FRTIB
The percentage of people receiving full matching Thrift Savings Plan (TSP) rates for federal employees under the FERS retirement system is at an all-time high of 87.6%. BRS Active Duty participants are also at an all-time high with 87.3%.
The number of general-purpose loans taken in the first seven months of 2024 is 14% higher than in 2023. Private sector plans have also seen increases in loans. This increase is likely due to several factors, including inflation’s impact on family budgets. This FedSmith article shows a recent calculation of how much the cost of food has increased since 2020.
The number of people accessing “My Account” through the TSP app has more than doubled over the same time last year, and biometrics as a means of authentication contributed to this increase. 25% of logins to the TSP site are now through the mobile app. The percentage of TSP participants using the app is going up. More data will be available later this year, and the number using the app and the number of TSP participants who have downloaded the app are expected to continue this upward trend.
L 2070 Fund Launched
The L 2070 fund was launched in late July. It is for people born in 2005 or later. It will be the new default fund in the future for newest participants, particularly for those in the military.
The investment objective of the L 2070 Fund is a high level of growth with a low emphasis on preserving assets. For federal retirees who will be retiring several decades, there will be time for the historically higher returns of the stock market to override the stock market downturns that always occur. This approach should provide these future federal retirees with a larger TSP balance for use after they retire.
Here is the allocation for the L 2070 Fund as of July 2024. As noted, the percentage going into the most conservative TSP Funds (G and F Funds) is very low.
| G Fund | 0.36% |
| F Fund | 0.64% |
| C Fund | 51.48% |
| S Fund | 12.87% |
| I Fund | 34.65% |
The allocation of the G, F, C, S, and I Funds within the Lifecycle Funds (except for the L Income Fund) is adjusted quarterly.
Rate of Return for TSP Rates in August and Year-to-Date
Investors in the federal government’s Thrift Savings Plan (TSP) are having a spectacular year. None of the TSP Funds have had a negative return in 2024 or for the year to date.
The C Fund has the best return. So far in 2024, it is up 18.8%. No other Fund is close to this return percentage. The second-place fund is the I Fund, with a return of 11.57%—still a great return.
The G Fund, often referenced as the safest TSP Fund, has a 2.91% return this year. As many readers have commented, the G Fund does not lose money. It also makes less than other TSP Funds when the market is going up but does provide a good balance of safety in an individual portfolio. In 2024 at least, those in the stock TSP’s stock funds are realizing a much higher return.
Among the Lifecycle Funds, the more aggressive funds are having an excellent year. The L 2030-L 2065 Funds are between 10.27% (L 2030) and 14.94% (L 2055, L 2060 and L 2065).
| Fund | Month-to-Date | Year-to-Date |
|---|---|---|
| G Fund | 0.30% | 2.91% |
| F Fund | 1.89% | 3.61% |
| C Fund | 1.82% | 18.80% |
| S Fund | 0.00% | 9.71% |
| I Fund | 2.48% | 11.57% |
| L Income | 0.82% | 6.08% |
| L 2025 | 0.91% | 6.96% |
| L 2030 | 1.35% | 10.27% |
| L 2035 | 1.45% | 10.98% |
| L 2040 | 1.54% | 11.69% |
| L 2045 | 1.62% | 12.29% |
| L 2050 | 1.68% | 12.89% |
| L 2055 | 1.81% | 14.94% |
| L 2060 | 1.81% | 14.94% |
| L 2065 | 1.81% | 14.94% |
| L 2070 | 1.82% | N/A |
The Thin Margin of Safety
Stock market investors always want to know how their stock investments perform in the near future. The answer is that there is always risk in investing, and no one can consistently and accurately predict the future.
Here is a rough guideline, though, as noted in the Wall Street Journal. “A margin of safety is ‘the secret of sound investment [distilled] into three words.'”
Right now, the margin of safety is thin. There is a great deal of unpredictability in the background. The wars in Ukraine and the Middle East, and America’s national elections coming in November are just three significant events that could significantly influence stock returns.
Some long-term investors look at the CAPE (cyclically adjusted price-earnings measure). Currently, the S&P 500 index (the index used by the C Fund) is at 35 times the average of the past decade’s earnings. This puts the index as the third most expensive since the 19th century. It is even more expensive than the 1929 high preceding the Great Depression and the subsequent massive loss in the stock market (an 89.2% loss for the index in less than three years).
To put this into perspective, The Dow Jones index did not return to its peak close of September 3, 1929, until November 23, 1954.
That is a scary scenario, and it is unlikely to accurately predict such a disaster in the short-term future of the U.S. stock market. This is not 1929. The future is probably as unpredictable as it was 100 years ago. Mutual funds did not exist, computers did not exist and America has not been an agricultural economy in many years. Numerous events have occurred that are taken into account by stock market measures and are unlikely to occur today.
This does mean the current stock market values are very high. Other measures also show a thin margin of safety. Investing in stocks with a thin margin of safety will likely mean lower returns from the stock market and, perhaps, a drop in stock market prices in the coming months.
