The TSP: Are the law of averages on your side?


When it comes to the federal Thrift Savings Plan, financial planner Arthur Stein says the average annual returns don’t tell you everything because TSP stock funds do not have many “average” years.

“The typical ways to view TSP returns is to look at the total return over a certain time period — annually, quarterly, year to date — or over a number of years,” he said.

Stein said patterns are easier to spot when returns are ranked by size. For instance, over the last 25 calendar years:

  • The C Fund declined for an entire calendar year in only four years.
  • Only two years had negative returns greater than -20 percent, but positive returns greater than 20 percent were present in nine years.
  • The average annual return for the C Fund was 11 percent, but returns were close to the average of 10-12 percent in only three years. Meanwhile, the returns for all the other years were much higher or lower.

So what does past performance mean for investors?

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Stein will answer that question when he joins host Mike Causey on today’s Your Turn radio show at 10 a.m. EDT at www.federalnewsradio.com or 1500 AM in the D.C. area.  Send any questions for Stein to me at mcausey@federalnewsradio.com.