Is the G fund in trouble?

The Treasury securities G fund is the most popular investment option for active and retired federal workers in the Thrift Savings Plan — except sometimes. Like now.

Many are concerned, as they have been in the past, that the government is going to borrow from the G fund until the debt ceiling issue is settled. Many fear, as they have almost every year when the issue comes up, they will somehow lose money in their otherwise super-safe investment.

The G fund has the lowest level of return (2.6 percent over the last 10 years) and 1.7 percent this year (as of September 30), but feds like it because it is “safe.” Unlike stocks and bond markets, it is guaranteed by the government. The G fund, for many investors, is the place to go in times of trouble. During the Great Recession, hundreds of thousands of investors moved from the stock-indexed C, S and I funds into the safe harbor of the G fund. Many remain there, even though the markets came roaring back. Over the last 10 years, the large-cap C fund returned 7 percent, the small-cap S fund returned 8.1 percent and the I fund returned 1.0 percent. The bond-indexed F fund had an average annual return of 4.6 percent during that period. People who bought stock funds during the Great Recession got them at bargain basement prices.

Through Sept. 30 of this year, the C fund is up 14.2 percent, the S fund is up 12.8 percent, the F fund is up 3.4 percent and the G fund is up 1.7 percent. The once-laggard international-stock I fund is up 20.3 percent. So folks who stuck with it and bought when it was down during the recession are big winners. At last.

So what about the safety of the G fund during the debt limit debate?

The Federal Retirement Thrift Investment Board (which runs the TSP) posted this notice on its website on Thursday:

“G Fund and the debt limit — (December 13, 2017): As of today, December 13, 2017, the U.S. Treasury was unable to fully invest the Government Securities Investment (G) Fund due to the statutory ceiling on the federal debt. However, G Fund investors remain fully protected and G Fund earnings are fully guaranteed by the federal government. This statutory guarantee has effectively protected G Fund investors many times over the past 25 years. G Fund account balances will continue to accrue earnings and will be updated each business day, and loans and withdrawals will be unaffected.”

Whether you should put all your eggs in the G fund, or any investment basket, is up to you. There are many reasons why everyone, especially retirees, should have stocks in their TSP retirement portfolio, as well as the G fund. But panicking over the debt ceiling issue isn’t a reason to leave the fund.

Nearly Useless Factoid

By David Thornton

Table tennis, or ping-pong, originated in England during the 1880s, where it was played among the upper-class as an after-dinner parlour game. It has been suggested that the game was first developed by British military officers in India or South Africa who brought it back with them.

Source: Wikipedia

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THRIFT SAVINGS PLAN TICKER

Oct 26, 2021 Close Change YTD*
L Income 23.3406 0.0147 3.52%
L 2025 12.1388 0.013 6.40%
L 2030 43.1053 0.0599 7.92%
L 2035 12.9750 0.0195 8.58%
L 2040 49.2122 0.0794 9.26%
L 2045 13.5082 0.0229 9.83%
L 2050 29.6522 0.0527 10.41%
L 2055 14.6732 0.0292 12.65%
L 2060 14.6731 0.0292 12.65%
L 2065 14.6730 0.0293 12.65%
G Fund 16.6901 0.0006 0.99%
F Fund 20.8361 0.0344 -1.40%
C Fund 68.8686 0.1251 15.90%
S Fund 87.5019 -0.4814 11.66%
I Fund 39.5427 0.2149 8.56%
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.