Surprising Events Impacting TSP Performance and Stock Prices
The stock market in January was bumpy. Despite the bumps in the road, the stock market was up for the month. There are frequently broader moves up or down with the change of administrations after national elections, and 2025 fell into this category. During the month, concerns about interest rates, trade disputes, and the DeepSeek AI surprise all had an impact on stock prices.
For those who have not followed the DeepSeek AI surprise, the Chinese company DeepSeek is trying to achieve artificial general intelligence, and the company’s advancements in reasoning capabilities for machines are significant progress in AI development. It says its AI models are as good as or better than industry-leading models in the United States but at a much lower cost.
The final trading hours of January turned when the White House announced tariffs starting Saturday on significant trading partners Canada, Mexico, and China. The tariffs raised investor concerns that inflation may go up. A rise in interest rates would lead to reducing or eliminating interest-rate cuts anticipated by stock traders.
US stocks have generally been strong and corporate earnings have helped stock prices go higher over the past two years. Recent corporate earning reports have also been strong.
Results of TSP Core Stock Funds
The C, S, and I Funds are the core TSP stock funds. Each of these funds were up and January.
| Fund | Monthly Return | 12-Month Return |
| C | 2.78% | 26.32% |
| S | 4.99% | 25.80% |
| I | 3.68% | 8.35% |
The S&P 500 index was up 2.7% for the month. This index is the one upon which the Thrift Savings Plan’s (TSP) C Fund is based. The TSP’s C Fund TSP finished up 2.78%.
All TSP Returns for January and Past 12-Months
| Fund | 12 Month Return % | January Return % |
| G | 4.46 | 0.39 |
| F | 2.04 | 0.51 |
| C | 26.32 | 2.78 |
| S | 25.80 | 4.99 |
| I | 8.35 | 3.68 |
| L Income | 8.26 | 1.20 |
| L2025 | 9.26 | 1.28 |
| L2030 | 13.52 | 2.21 |
| L2035 | 14.39 | 2.38 |
| L2040 | 15.27 | 2.56 |
| L2045 | 16.03 | 2.71 |
| L2050 | 16.80 | 2.86 |
| L2055 | 19.65 | 3.36 |
| L2060 | 19.65 | 3.36 |
| L2065 | 19.64 | 3.36 |
| L2070 | 7.6 | 3.36 |
The TSP in 2024
The Thrift Savings Plan had a record year in 2024 in several ways. Full TSP matching rates for FERS employees were up to 87.9%. Roth participation grew to 2.72 million accounts with over $70 billion in assets. There were 60,066 rollovers into the TSP totaling $2.8 billion dollars.
General loans from the TSP were up 10% from the previous year and hardship withdrawals were up 34%.
At the end of December, total TSP assets were $963 billion and Roth assets were $71 billion.
For comparison, at the end of December 2023, TSP assets were $849 billion and Roth assets were $55 billion. As an illustration of how the TSP has grown, TSP assets back in 2014 were “only” $418 billion.
Interfund Transfers: How Investors Reacted in Bull Market
In December, about $1.405 billion was transferred from the G Fund. The C Fund gained $1.171 billion, the S Fund $1.081 billion, and the L Fund transfers out totaled $800 million.
TSP participant allocation dollars in the TSP at the end of December 2023 to the end of December 2024 look like this:
| Fund | Year-End 2022 | Year-End 2023 | Year-End 2024 | Difference (billions) |
| G | $240.1 | $234.1 | $227.8 | $-12.3 |
| F | $19.5 | $20.4 | $20.1 | $0.6 |
| C | $210.0 | $270.9 | $348.1 | $138.1 |
| S | $64.4 | $82.4 | $98.3 | $33.9 |
| I | $25.7 | #32.0 | $30.9 | $5.2 |
The current bull market in stocks started late in 2022. The data in this chart show how allocations in the TSP by investors changed during the current bull market. Obviously, as the bull market went on, TSP investors withdrew money from the G Fund and invested in the TSP’s stock funds as the TSP returns were higher.
The risk, of course, is that stock funds are more volatile. They go up higher during a bull market and drop faster during a bear market. The last bear market in stocks lasted from January to mid-October 2022. During that time, the S&P 500 index dropped about 25%.
The G Fund is often thought of as the safest TSP Fund. It never goes down. Investors investing in the stock market can realize greater profits when stocks are going up (a bull market). As the current bull market progressed, TSP investors put considerably more into the TSP stock funds—presumably because they thought they would make more money in stocks than in the G Fund which does not invest in stocks.
The G Fund is the Government Securities Investment Fund. The TSP states that the fund’s objective is to “ensure preservation of capital and generate returns above those of short-term U.S. Treasury securities.”
The C Fund tracks the performance of the S&P 500 index. This stock market index tracking the performance of 500 of the largest companies in the United States is generally considered a standard for measuring overall stock market performance.
The S Fund is a Small cap stock Index investment fund. It tracks the performance of the Dow Jones U.S. Completion Total Stock Market Index. This index is made up of small and medium-sized companies.
The I Fund is the International Stock Index Investment Fund. The I Fund is the international investment option for the TSP as the companies in this index are primarily foreign (non-U.S.) companies. The Index is designed to represent the performance of large and mid-cap securities, including countries in Europe, Australasia, and the Far East, excluding the U.S. and Canada.
How Investors Reacted in Bear Market
| Fund | December 31, 2021 (billions) | October 31, 2022 (billions) | Difference (billions) |
| G | $210.9 | $240.5 | +$29.6 |
| F | $24.9 | $18.9 | -$6 |
| C | $268.7 | $211.3 | -$57.4 |
| S | $91.2 | $66.0 | -$25.2 |
| I | $30.7 | $22.3 | -$8.4 |
In a bear market, TSP investors reacted the same as most stock market investors. They dumped their stock funds and added to the safer G Fund. Since no one can predict when a bear or bull market will start or end, this is sometimes a method of accelerating losses.
The core TSP stock funds dropped by $91 billion in a few months during the bear market. If a person guessed right and sold stock funds just before the bear market started and bought stock funds just before the bull market started, that would be very profitable.
It is more likely a person sold stock funds midway or toward the end of the bear market. The emotional reaction to seeing your investment drop month over month is strong. Most of us cannot resist selling a loser at some point—often just before the stocks start going back up.
Human nature is what it is. It is easy to understand the problem and very hard to resist the urge to sell when prices are down.
In summary, 2025 is off to a good start for TSP investors. The market is up. We wish all readers a successful year in your investments!
