When to consider moving your TSP funds around

By Suzanne Kubota
Senior Internet Editor

We’re told time and again to “buy low and sell high.” Easier said than done. For example, we know the market is low, but how low will it go?

Art Stein, certified financial planner, tells FederalNewsRadio, “what we see now… is the best of times and the worst of times.”

On the Federal Drive with Tom Temin and Jane Norris, Stein pointed to the C fund of the Thrift Savings Plan as an example. Through the end of July this year, the fund is up 11% since the beginning of the year. However, in the 12 months ending in July, the same fund is down 20% and over the past 10 years, it’s down 26%.

So the question is, what is the trend?

“We don’t know,” said Stein. Even the experts can’t tell if the stocks are up or if the stocks are down and what has happened so far this year is “just a blip.”

“What we can definitely say about trends is they always continue until they don’t continue, and then they’re either going to get better or worse.”

Armed with that information, Stein offers this observation:

When I look at what’s going on now, I would say for TSP investors, a big risk that they should be aware of is that if interest rates go up, the value of the F fund, which is the fixed income fund in the TSP, is going to go down. And if interest rates go up a lot, the F fund could go down a lot.

Historically, we’ve been told that bonds are a safe haven. They certainly fluctuate less than stocks, but if interest rates go up sharply, that’s not going to be true.

His advice: stick with the G fund. But, Stein adds, the G fund is not for everybody. It “depends on how soon they’re going to need the money.”

For money that you’re not going to be spending for 10 or 20 years, you need to think about inflation and on an after-tax basis, the G fund does not keep up with inflation, so your purchasing power is going down. That’s not a huge, awful thing over a 3 to 5 year period, but over a 10 or 20 year period, it is.

The Federal Retirement Thrift Investment Board reports in June, TSP participants moved nearly $1 billion from the G and F funds into the stock-based C, S and I funds.

On the Web:

Thrift Savings Plan – tsp.gov

(Copyright 2009 by FederalNewsRadio.com. All Rights Reserved.)


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Jun 22, 2021 Close Change YTD*
L Income 22.9769 0.0208 2.88%
L 2025 11.8330 0.0206 5.61%
L 2030 41.7184 0.0928 7.07%
L 2035 12.5259 0.0305 7.71%
L 2040 47.3894 0.1253 8.36%
L 2045 12.9813 0.0367 8.91%
L 2050 28.4348 0.0853 9.49%
L 2055 13.9607 0.0491 11.70%
L 2060 13.9606 0.049 11.70%
L 2065 13.9605 0.049 11.69%
G Fund 16.6100 0.0007 0.53%
F Fund 20.8461 0.0253 -2.22%
C Fund 63.6526 0.3246 12.61%
S Fund 84.6643 0.5339 11.60%
I Fund 38.9261 0.0031 10.58%
Closing price updated at approx 6pm ET each business day. More at tsp.gov
* YTD data is updated on the last day of the month.