Goldilocks and the 3 TSP funds

Are you excited, dazzled and worried — sometimes at the same time — by the stock market boom? Are you concerned about what many experts say is a long-overdue market correction? Do you still have the occasional nightmare about the Great Recession? If so, welcome to the club.

Obviously, nobody knows when, if and for how long any correction might be. But we asked financial planner Arthur Stein for his take. He’ll also be my guest today on our Your Turn radio show at 10 a.m. We asked what’s happening and what’s next. This is what he said:

“This has been a ‘Goldilocks’ period for the TSP funds and U.S. economy. Not too hot and not too cold, resulting in lots of positive investing news. For instance, TSP stock fund prices increased while volatility was at record lows.

Over the last 12 months, the stock funds (C, S and I) increased about 19 percent. Bond fund (G and F) returns lagged far behind. TSP Fund Returns as of Sept. 30, 2017

Recent TSP Fund Returns as of Sept. 30, 2017
MONTH G FUND F FUND C FUND S FUND I FUND
YEAR TO DATE 1.7% 3.4% 14.2% 12.8% 20.3%
LAST 12 MONTHS 2.2% 0.3% 18.6% 19.2% 19.5%
   Source: TSP.gov. Returns rounded to tenths of a percent.

There was plenty of bad news that could have negatively impacted the TSP funds, but didn’t: escalating tensions between North Korea and the U.S., destruction from three very powerful hurricanes, clashes between protestors in Charlottesville, Virginia and political turmoil in Washington.

The stock markets seemed to reflect more of the positive news, such as strong corporate earnings, an expanding U.S. economy and low inflation and interest rates.

During such a blissful period for investors, it is important to remember that stock and bond markets go down as well as up. According to Jason Zweig in the Wall Street Journal: ‘The longer markets go on producing decent performance at little apparent risk, the more investors come to believe that high returns must be a kind of entitlement.’ Meaning, many investors forget that a greater than 20 percent stock market decline is long overdue, based upon historic averages. Of course, past performance is no guarantee of future performance.

Knowing that a decline is somewhere in the future may keep you from reacting emotionally when the decline occurs. You don’t want to be an investor who withdraws money from stock funds after they decline and doesn’t reinvest when the markets hit bottom.”

Arthur Stein

Got questions? Email them to me before showtime (10 a.m. EDT). We’ll get you some answers.

Nearly Useless Factoid

By Michael O’Connell

Since Yellowstone National Park was established in 1872, eight people have been killed by grizzly bears in the park.

Source: NPS

Read more of Mike Causey’s Federal Report

Related Stories

    Worried about possible retirement changes? 3 pieces of advice from a federal financial planner

    no term Read more

    TSP rebounds from end-of-summer slump with better returns

    Read more

    Influx of new participants, modernization plans behind TSP board’s 20 percent budget boost

    Read more

Comments

Your Turn with Mike Causey

WEDNESDAYS at 10 A.M.

Learn about everything from pay, benefits and retirement, to buyouts, COLAs and pay freezes. Call the show live Wednesdays from 10-11 a.m. at 202-465-3080 with your questions. Dial 605-562-0264 to listen live from any phone. Follow Mike on Twitter and send him an email with your questions and comments. Subscribe on Apple Podcasts or Podcast One.

Sign up for breaking news alerts

THRIFT SAVINGS PLAN TICKER

Dec 01, 2020 Close Change YTD*
L Income 22.0880 0.0454 4.04%
L 2025 10.9632 0.0514 -
L 2030 37.9432 0.2193 8.24%
L 2035 11.2965 0.0714 -
L 2040 42.3740 0.2915 9.51%
L 2045 11.5224 0.0845 -
L 2050 25.0528 0.1959 10.56%
L 2055 11.9801 0.1171 -
L 2060 11.9802 0.1171 -
L 2065 11.9803 0.1171 -
G Fund 16.4968 0.0004 0.89%
F Fund 21.0938 -0.073 7.35%
C Fund 54.4504 0.6078 13.93%
S Fund 69.6009 0.4102 22.95%
I Fund 34.1572 0.3378 3.37%
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.