Instant Depression

If you want to depress one of your colleagues (and who doesn’t?), ask him or her how their 401(k) plan did last year. I have two 401(k) plans. One is down 36 percent. The other one, my “winner” is down only 31 percent.

Many, if not most, federal, postal and military investors in the federal Thrift Savings Plan are not happy with their account balances right now. Unless they had most or all of their money in the G and F funds. The G-fund is unique to federal investors. Its rate is set by (and guaranteed by) the government. When the market is booming the G and the F (bond index) funds often bring up the rear. But when times are tough, the G-fund is gold. Example:

Last year the G-fund returned 3.75 percent. And the F-fund did even better, returning 5.45 percent.

By contrast the higher risk, higher reward stock index funds took a beating.

The C-fund (which tracks the S&P 500 index) was down 36.99 percent.

The S-fund which tracks most of the rest of the U.S. stock market was off 38.32 percent and the international stock index I-fund was down 42.43 percent for the 2008 year.

Investors in the lifecycle funds (targeted to the date when you expect to start tapping your account) did a little better. The L-income fund, designed for people who are either withdrawing money from their account or soon will be, was down “only” 5.09 percent for the year.

The L2010 fund was off 10.53 percent; the L2020 fund was down 22.77 percent; the L2030 fund was off 27.50 percent and the L2040 fund (with the highest percentage of stocks) was down 31.53 percent.

For some people those numbers are a disaster. The drop in TSP balances caused some people, who had hoped to retire this month, to recall their retirement papers.

For some feds, particularly those who are going to be working for a longer period of time, the down market represents a buying opportunity. Stocks, they figure, may be at or near the bottom in value.

Bloomberg News recently reported that there is more cash available in the economy to buy stocks than at any time in the last 20 years. That’s a sign to some people, Bloomberg said, that the stock market will rebound as bargain-hunters who have been sitting on $8.85 trillion in cash start buying. To read the full story, click here.

Babysitting Your Finances

They say the two most popular New Year’s resolutions involve losing weight and putting one’s financial affairs in better order. As far as the weight thing goes, you are on your own. But we can help with the financial side.

Are you (or a friend) in the process of getting married, having a baby or getting divorced? Even if you’re happily single or married and the kids are okay, you may have resolved to get your financial house in order this year. If so…

Listen to our Your Turn radio show today at 10 a.m. EST. You can get us on the radio in the Washington area (at AM 1500) or listen anywhere via your computer. Our guest, financial planner Rebecca Schreiber, will talk about things like merging, or separating your finances, from a spouse, partner, parent or child, and she’ll give you tips for getting the most bang for your buck. Listen if you can. Call in if you like. If you can’t call but have a question for her, you can email it to me at:

Nearly Useless Factoid

Golf can damage your hearing. According to Time magazine, a study in the latest issue of the British Medical Journal found that modern, thin-faced titanium golf clubs produce a noise loud enough to damage the sensitive hairs of the inner ear. It sure is going to throw off my swing if I have to put my fingers in my ears when I tee off.

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