Investing: How Safe Is Playing It Safe?

When they look at TSP returns, most investors probably focus on percentage gains or losses. But within the federal 401(k) plan, people also own, buy and sell “shares” with values which can change daily. So how are your shares doing?

Last year (2007) the value of a single share of the international stock index fund, the I-fund, went up $2.32. That may not sound like much unless you have a lot of shares, or unless you compare it with the performance of the super-safe treasury securities G-fund. The value of a G-fund share you had in January of last year went up only 56 cents by the end of the year.

So how’s your portfolio doing? After all 2007 was a roller-coaster year in the stock market. There was enough bad news that thousands of TSP investors moved millions of dollars from the international and domestic stock market funds (the S, C and I funds) into the super-safe treasury securities G-fund.

There are dozens of ways to measure the progress (or lack of same) of an investment. Most pros recommend that people diversify and invest for the long haul. They caution against trying to time the market (guessing when to get out and when to come back in) because they say this is usually motivated by fear or greed, not any special knowledge. What counts, the pros say, is not how your TSP account is doing now, but where it is when you begin to spend it. After all, if it’s down now, you may be buying low.

So here’s a one year look at the value of shares the various TSP funds from the start of 2007 (Jan. 3) to the end of 2007 (Dec. 31):

LifeCycle Funds

L 2040 fund went from $17.03 to $18.24, L 2030 fund went from $16.29 to $17.41, L 2020 fund went from $15.61 to $16.65, L 2010 went from $14.55 to $15.46, L Income fund went from $12.77 to $13.47.

Stock Index Funds

The I-fund (international stocks) went from $22.44 at the start of 2007 to $24.76 on Dec. 31 of 2007. S-fund (small cap) went from $18.76 to $19.79. The C-fund (S&P 500) $15.67 to $16.56.

The super-safe G-fund (treasury securities) went from $11.72 to $12.28 during the year.

The bond-indexed F-fund went from $11.18 to $11.93.

TSP Track Record

Here’s the official 2007 score card for all of the TSP’s funds.

Today’s Nearly Useless Factoid

You’ve heard about the fuel made from corn, but did you know there are also tires made from it too?

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