Mike Causey

TSP Returns: The Groans of August

If you\'ve enjoyed the stock market ride for the past year, get ready to hit some bumps. The August returns for the Thrift Savings Plan will soon be published a...

Federal News Network Staff

September 2, 2010 4:00 am

4 min read

If your Thrift Savings Plan investments are in the stock-indexed C,S or I funds, take a deep breath.

The soon-to-be released returns for the month of August won’t be pretty.

Stocks, which had been doing very well, were hammered last month. That will be reflected in numbers published later today or Friday.

But till then…

Before we get the depressing (one month) August numbers, bask in the returns you have enjoyed for the 12-month period ending in July. For that 12-month period the small-cap S-fund returned 22.14 percent; the large cap C-fund returned 13.87 percent, the bond-indexed F-fund returned 9.02 percent and the international stock index I fund returned 5.81 percent. The never-has-a-bad day treasury securities G-fund returned 3.17 percent.

Before the recession the C-fund was the investment of choice for most TSP participants. Thanks to biweekly contributions from employees and high returns, it was the money-maker. But since the markets tanked more people have moved into the safety of the calm Treasury securities G-fund. For the 12-months ending in July, 46 percent of all TSP investment money was in the G-fund. Only 22 percent was in the C-fund reflecting both negative returns and the investors moving out of it.

The bottom line, if there is one, is that markets go up and they go down. And that past performance (10 year returns, year-to-date returns, 12-month returns, calendar year returns or monthly returns) may mean something. Or not.

People with the proven ability to time the market (buy low and sell high on a consistent basis) should all be driving $200,000 cars, living on yachts with no need for a lame 9 to 5 job like working for the government or slaving over a hot keyboard.

But whether you go with the stock market, stick to bonds, huddle in the G-fund, make your own mix or go with the Lifecycle L-funds, remember that most federal and postal workers (those under the FERS retirement system) are eligible for matching government contributions of up to 5 percent from the government. That’s the equivalent of a 5 percent tax deferred pay raise, and it’s 5 percent more than many (if not most) private sector companies give their 401(k) plan investors.

Invest any way you like. Financial experts, both real and wannabe, aside, you must be comfortable with your investments. But whatever you do, don’t be one of the 400,000 FERS employees who aren’t taking advantage of the full government match.

AFSCME Icon

Carl Goldman has started his 21st year as executive director of Council 26 (federal unions) of the American Federation of State, County and Municipal Employees. He also serves on the Metro Washington Labor Council’s executive board and is vice president of the Maryland-DC AFL-CIO. Goldman also worked with The Newspaper Guild, the AFGE and NTEU unions. He’s aggressively organized at Justice, FAA , the Architect of the Capitol and the Voice of America. Nationally, AFSCME has one of the largest political action committee (PAC) warchests. Locally the Metro Washington Labor Council has been active in the DC primary race, backing candidate Vincent Gray.

To reach me: mcausey@federalnewsradio.com

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