TSP’s don’t-get-no-respect fund

The late, great comedian Rodney Dangerfield always complained that he didn’t get any respect. The line was nearly always part of his routine. And it worked every time. You knew it was coming and laughed when it did.

But if Dangerfield had been an expert on the federal Thrift Savings Plan, or a TSP investor, he might have slapped the no-respect label on the TSP’s bond fund, the F fund. It’s one of the two least popular traditional funds in the federal 401(k) plan, where most people put most of their retirement nest egg in the super-safe (also super-dull) Treasury securities G-fund.

Arthur Stein, a D.C.-area financial planner who has many TSP clients, said it’s a fact, “The F fund gets no respect, but it should.”

Stein’s client base includes a couple of feds who have more than $1 million in their TSP accounts. And they did it the hard way, not by transferring money into the TSP, but by regular, steady, long-term investing.

In addition to the C, S and I stock funds, he says that the TSP has two bond funds. One may get too much attention, the other not enough:

  • The G fund, which invests solely in government securities and never fluctuates in value.
  • The F fund, which invests in government, corporate and mortgage-backed bonds and does fluctuate in value as interest rates increase and decrease.

The F fund was usually the top performer (as of Dec. 31, 2016).

  • Looking at Average Annual Rates of return, the F fund outperformed the G fund over the last one, three, five and 10 years.
  • Over the last 20 calendar years, the F fund outperformed the G fund 75 percent of the time (15 out of 20 years).

So where do feds put most of their money? The G fund, not the F fund, Stein said.

Investment Allocations Compared to Investment Returns
Fund Percent of Dollars Invested 10-year Average Annual Rates of Return
G-fund 36 percent 3 percent
F-fund 5 percent 5 percent

Stein says that federal TSP participants “invested seven times as much in the G fund as the F fund despite the F fund’s historical record of outperforming three out of every four years.” Question: Why? And what should people be doing? We’ll talk about the pros and cons of investing in the various funds, and the fact that too many people may have too much of their nest egg in the G fund. and other TSP topics today at 10 a.m. EST our Your Turn radio show. You can listen at Federal News Radio or in the D.C. metro area on 1500 AM

If you have questions for him, or want to explain why you do or don’t invest in the G and F funds, send them to me (before showtime) at mcausey@federalnewsradio.com.

The show will be archived on our homepage, so if you miss it, want to listen again or pass it on to a friend, you can.

Nearly Useless Factoid

By Michael O’Connell

Rodney Dangerfield was born Jacob Cohen on Nov. 21, 1921, in Deer Park, Long Island, New York.

Source: IMDB

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May 14, 2021 Close Change YTD*
L Income 22.8205 0.092 2.39%
L 2025 11.6927 0.0945 4.76%
L 2030 41.1018 0.4273 6.01%
L 2035 12.3241 0.1406 6.56%
L 2040 46.5644 0.5777 7.12%
L 2045 12.7395 0.1694 7.60%
L 2050 27.8739 0.3945 8.10%
L 2055 13.6430 0.2304 10.05%
L 2060 13.6429 0.2305 10.05%
L 2065 13.6427 0.2305 10.05%
G Fund 16.5839 0.0007 0.40%
F Fund 20.6395 0.0427 -2.55%
C Fund 62.4643 0.9226 11.83%
S Fund 80.5153 2.0505 12.34%
I Fund 38.2575 0.6353 6.73%
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.