STWS Adviser provides Feds with her monthly TSP update. S and C Funds top the TSP last year.
The year 2020 will go down in the history books as a year defined by the COVID-19 pandemic. As 2020 began, the U.S. became aware there was potential for a global health crisis which originated in Wuhan, China. By Spring, parts of the country were on complete lockdown as the rush for scarce PPP sources and adequate testing in our healthcare system emerged as the first of many uphill battles the country would face in 2020. Markets responded in February and March with dramatic sell offs amid the uncertainty. However, by year end, markets rebounded in grand fashion; rewarding disciplined investors with strong performance in the equity markets for the year.
Performance figures for the month of December 2020 were just released on the TSP website. The best performer for the month was the S fund at 7.24%, while the G fund was the worst at .07%. For the year to date beginning January 1, 2020, the best performing fund is the S fund at 31.85% and the worst is the G fund at .97%. Monthly returns for 2020 are shown below. (source, TSP.gov)
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| Last 12 months | 0.97% | 7.50% | 18.31% | 31.85% | 8.17% |
| 2020 YTD | 0.97% | 7.50% | 18.31% | 31.85% | 8.17% |
| December | 0.07% | 0.14% | 3.84% | 7.24% | 4.64% |
| November | 0.07% | 0.99% | 10.95% | 18.26% | 15.54% |
| October | 0.06% | -0.42% | -2.66% | 0.50% | -3.97% |
| September | 0.06% | -0.03% | -3.80% | -3.04% | -2.60% |
| August | 0.05% | -0.81% | 7.19% | 7.20% | 5.12% |
| July | 0.06% | 1.49% | 5.64% | 5.71% | 2.33% |
| June | 0.06% | 0.63% | 1.99% | 4.00% | 3.44% |
| May | 0.06% | 0.46% | 4.76% | 8.79% | 4.50% |
| April | 0.07% | 1.78% | 12.81% | 15.81% | 6.42% |
| March | 0.11% | -0.64% | -12.40% | -21.40% | -13.87% |
| February | 0.13% | 1.82% | -8.24% | -8.01% | -7.74% |
| January | 0.17% | 1.91% | -0.04% | -0.62% | -2.73% |
Month to month trends, as shown above, are interesting, but it is important to remember that short term market volatility is to be expected and employees should not be making investment decisions based on short term performance. Following are longer-term rates of return for each fund, as of December 2019. (source, TSP.gov)
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| 1 year | 2.24% | 8.68% | 31.45% | 27.97% | 22.47% |
| 3 Year | 2.49% | 4.16% | 15.25% | 11.14% | 9.97% |
| 5 year | 2.27% | 3.25% | 11.71% | 9.17% | 6.20% |
| 10 year | 2.23% | 3.99% | 13.59% | 13.08% | 5.85% |
| Inception Date | 4/1/1987 | 1/29/1988 | 1/29/1988 | 5/1/2001 | 5/1/2001 |
With the start of a new year, it is normal to have anticipation regarding what is next for the markets. While no one can predict what 2021 will bring, we do know that it is important that TSP participants rebalance their accounts at least annually. The start of the new year is as good a time as any to take a look and rebalance if needed. In addition, the federal employee pay raise of 1% for 2021 provides an opportunity to increase TSP contributions. Other items of note with regards to your TSP include the 2021 contribution limits. The IRS kept the limits for 2021 the same as they were in 2020. Employees under the age of 50 can contribute a maximum of $19,500 to their TSP while those age 50 and over can contribute an additional $6,500 as part of their “catch up” contribution. In addition, beginning in 2021, you will no longer need to make separate catch-up elections each year. Once an employee has maxed out their traditional contributions, they will automatically roll into the catch up if the employee is over age 50. In addition, employee’s elections will carry over from year to year going forward.
Please reach out to us with questions and follow our website for the most recent updates.
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**Written by Jennifer Meyer, Financial Planner. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Jennifer Meyer and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.**
