STWS Advisor Jennifer Meyer reviews the investments in the TSP, and what affected their performance last month.
May brought continued generally positive results for the equity markets, including the C, S, and I funds in TSP. The headline news of the month is the increasing inflationary environment that the U.S. is experiencing. With significant supply chain shortages, companies are passing higher costs on to consumers. While the Federal Reserve has continued to maintain its stance that inflation is transitory, market watchers are questioning how long the Fed will sit on the sidelines if inflation continues to rise. On a year-to-date basis, market indices continue to show a trend away from more growth-oriented assets in favor of value-oriented investments. It is impossible to know if this trend will continue, but as always, investors should be ensuring their portfolios are well balanced across all asset classes.
Performance figures for the month of May 2021 have been posted on the TSP website. The best performer for the month was the I fund at 3.61%, while the short-term government bond G fund was the worst for the second month in a row 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 | 0.96% | -0.29% | 40.29% | 62.54% | 39.15% |
| 2021 YTD | 0.53% | -2.22% | 12.61% | 11.60% | 10.58% |
| 2021 Monthly | |||||
| May | 0.13% | 0.34% | 0.69% | -0.66% | 3.61% |
| 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.
Please also make sure to check that your TSP Beneficiary information is up to date. Our advisors find that a good percentage of employees have either no beneficiary on file- or what is on file is out of date. This is a critical part of planning to ensure the funds you have worked so hard to build will end up in the hands of the people or charities you desire.
**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.***
