STWS Advisor Jennifer Meyer provides a quick review of how the TSP performed last month
April brought continued generally positive results for the equity markets, including the C, S, and I funds in TSP. It is notable that many Americans received additional stimulus payments during the month as a result of President Biden’s coronavirus relief package. Whether that money is being spent or saved by Americans continues to be a topic of debate, but either way, the equity markets continue to rise to record highs amid speculation that as the coronavirus pandemic moves further into the rear view mirror the economy will boom with reduced unemployment and the return to normalcy across the country. The major concern for markets is whether or not we will see an acceleration in inflation over the coming months and how the Federal Reserve will react to it if it occurs. Markets are known to be volatile during periods of uncertainty. TSP participants should be reviewing their overall allocation to make sure they are staying true to their targets for each of the funds. One of the advantages of using the L fund is that these funds are automatically rebalanced for participants. The L funds invest a certain percentage in each of the 5 core funds shown below according to a target date in the future. Participants should carefully choose the date of the fund they plan to use if they are using the L funds.
Performance figures for the month of April 2021 have been posted on the TSP website. The best performer for the month was the C fund at 5.33%, while the short-term government bond G fund was the worst at .13%. Monthly and year to date returns for 2021 are shown below. (source, TSP.gov)
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| Last 12 months | 0.89% | -0.17% | 45.96% | 78.00% | 40.34% |
| 2021 YTD | 0.40% | -2.55% | 11.83% | 12.34% | 6.73% |
| 2021 Monthly | |||||
| April | 0.13% | 0.82% | 5.33% | 4.23% | 3.09% |
| March | 0.11% | -1.23% | 4.38% | -0.39% | 2.35% |
| February | 0.08% | -1.45% | 2.76% | 5.21% | 2.26% |
| January | 0.07% | -0.71% | -1.01% | 2.85% | -1.09% |
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 2020. (source, TSP.gov).
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| 1 year | 0.97% | 7.50% | 18.31% | 31.85% | 8.17% |
| 3 Year | 2.03% | 5.38% | 14.13% | 15.25% | 4.68% |
| 5 year | 2.05% | 4.57% | 15.20% | 16.06% | 7.99% |
| 10 year | 2.04% | 4.07% | 13.90% | 13.32% | 5.87% |
| Inception Date | 4/1/1987 | 1/29/1988 | 1/29/1988 | 5/1/2001 | 5/1/2001 |
The TSP is a critical part of an employee’s retirement plan. While no one can predict what 2021 will bring with regards to investment returns, we do know that it is important that TSP participants take a proactive role in monitoring their TSP accounts. This does not mean checking their balances and trying to time the market. Rather, it means being aware of the options available and managing those options to maximize your personal retirement outcome. At Serving Those Who Serve, we have found many employees do not truly understand the Roth TSP versus Traditional TSP. Our podcast featuring Ed Zurndorfer is a great educational resource.
**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. **
***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.***
