The stock funds in the Thrift Saving Plan (TSP) have been rattled by the stock market’s volatile month.
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A stock market correction is frequently defined as a drop of 10% or more from an all-time stock market high, or a recent stock market high. This month, major market indices like the S&P 500 and the NASDAQ Composite Index entered correction territory. As of the market’s close on January 26th, the S&P 500 was down -9.31% year-to-date (YTD) and the NASDAQ had fallen -14.47%. This represents the biggest tumble on Wall St. since March 2020, and has negatively impacted the short-term returns of the stock funds (C, S, and I) in the TSP. As of January 26th, the C-fund had dropped -8.67% since the year began, the S-fund’s value fell -13.9%, and the I-fund decreased -5.01% in the same timeframe.
A host of factors can be blamed for the market’s recent volatility, such as increasing interest rates, Omicron, inflation, geopolitical concerns, etc. Bonds, like those in the F Fund (which is down -2.38% YTD, as of 1/26), cash, and cash alternatives (similar to the G Fund, up 0.11%) can help in protecting your savings during stock market corrections.
Good advice to follow in such volatile times includes staying properly diversified, avoiding speculative investments, and most importantly, remaining calm (don’t panic). If you have a financial advisor who is familiar with your individual situation, it is best to discuss with them about what options are best when it comes to your investments.
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Until Next Time,
**Written by Benjamin Derge, Financial Planner, ChFEBC℠ 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 Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.
***The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. The TSP is a defined contribution plan, meaning that the retirement income you receive from your TSP account will depend on how much you (and your agency or service, if you're eligible to receive agency or service contributions) put into your account during your working years and the earnings accumulated over that time. The Federal Retirement Thrift Investment Board (FRTIB) administers the TSP.***
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results.
