TSP thermometer: 2018 bad, 2019 good, 2020?

Stock markets, like people and wine, have good years and not-so-good years.  Investors who try to buy low and sell high don’t have very good track records. But people try.

Take 2018, please! That year the C fund, which tracks the S&P 500 was down 4.4%. But investors who continued to buy shares got a pleasant surprise in 2019 when the C fund was up 31.5%. The story was the same for the S fund (small cap) and I fund (international stock index), which also had bad years in 2018 but bounced back big time — 28% and 22.5% last year, respectively. That means something, but what?

We asked Washington, D.C., area financial planner Arthur Stein for his take. He has several self-made Thrift Savings Plan millionaires among his clients. He’ll be my guest on today’s Your Turn show at 10 a.m. EST. You can listen at www.federalnewsnetwork.com or on 1500 AM in the D.C. metro area. The show will also be archived on our home page so you or a friend can listen later. If you have questions for Art Stein send them to mcausey@federalnewsnetwork.com before showtime. Meanwhile, he has this excellent example of good years and not so good years for TSP investors:

The yin and yang of TSP investing

Ying and yang, good and bad — TSP investors saw both over the last two years.

The bad news was 2018. The three stock funds declined and the F fund (bonds) was barely positive. The G fund outperformed the other four.

Not only were returns bad in 2018 but volatility was higher than 2019. For example, stock prices plunged between Sept. 20 and Dec. 24, 2018. The C fund had declined 19% by Dec. 24 — not a Merry Christmas.

The good news was 2019. TSP investors who did not withdraw from the stock funds in 2018 were rewarded. The 2019 returns for F, C, S and I were high enough to produce excellent returns over the last two years. During the two-year period, the C fund increased over 25%, the S fund 16% and the I fund 6%.

This is an example of the advantages and disadvantages of investing in stocks and bonds, including stock funds and bond funds. Historically, stocks were a good long-term investment but often a poor short-term investment. But over the last three, five and 10 years the stock funds outperformed.

Nearly Useless Factoid

By Amelia Brust

Long before fast food restaurants needed them for sides of mac ‘n cheese or coleslaw, the spork was patented by Samuel W. Francis nearly 150 years ago today. He came from an upper class background and thought there were one too many utensils on the dinner table. But the name “spork” was trademarked by Hyde W. Ballard in 1951.

Source: Vox

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Jun 21, 2021 Close Change YTD*
L Income 22.9561 0.0611 2.88%
L 2025 11.8124 0.0649 5.61%
L 2030 41.6256 0.2955 7.07%
L 2035 12.4954 0.0971 7.71%
L 2040 47.2641 0.4002 8.36%
L 2045 12.9446 0.1172 8.91%
L 2050 28.3495 0.2739 9.49%
L 2055 13.9116 0.1663 11.70%
L 2060 13.9116 0.1663 11.70%
L 2065 13.9115 0.1663 11.69%
G Fund 16.6093 0.002 0.53%
F Fund 20.8208 -0.06 -2.22%
C Fund 63.3280 0.8773 12.61%
S Fund 84.1304 1.2488 11.60%
I Fund 38.9230 0.325 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.