TSP investors overlooking a winner?

Most of the 75,420 (as of Dec. 30, 2020) feds with $1 million-plus Thrift Savings Plan accounts have three things in common. And none of which is age, occupation, sex, geographic location or agency.

The vast majority got Club Millionaire status by doing the same three things:

  • They invested for the long haul, (average 29+ years) to hit the 7-digit mark, taking full advantage of the government’s matching contributions.
  • They continued to invest during market downturns, meaning, in most cases, they bought shares that were on “sale” and they didn’t miss out when markets quickly recovered.
  • Most invested heavily or exclusively in the C, S and I funds, which represent the S&P 500 (C-fund), the S-fund, which is the other 3,000-plus stocks that are NOT part of the S&P 500, and/or the I-fund, made up of selected international stocks.

Several readers have sent us blueprints they followed to millionaire status. , like the man who went from an account balance of 0 to just over $1.3 million in 23 years.

If you are doing well, congrats. Nice work! But could you be doing even better? If you are one with a TSP portfolio heavily or 100% in the stock indexed C, S and I funds, are you overlooking the best of the bunch. Arthur Stein believes you should think about it. He’s a well-known financial planner in the Washington D.C. area. Several of his clients are TSP millionaires. And he teaches classes on TSP investing at Montgomery College. And he thinks lots of investors are missing out on a good thing. Based on past performance, he says investors should take another look at the S fund. He’s my guest today on our Your Turn radio show at 10 am EST. You can stream it live here or on the radio in the D.C. area at 1500 AM. If you miss it or want to hear it again it will be archived on website.

Meantime here’s his take on what TSP investors may be missing out on:

Is the S Fund a missed opportunity?

By: Arthur Stein, CFP

The two U.S. stock funds in the TSP are the:

  1. C Fund, which invests in the stocks of large U.S. companies. It is an S&P 500 Index Fund.
  2. The S Fund, which invests in the stocks of medium and small sized U.S. companies. The Index used is the Dow Jones U.S. Completion Total Stock Market Index. That Index contains 3301 stocks that are not in the S&P 500.

As of December 31, 2020, the S Fund outperformed the C Fund over the last 1, 3, 5, 15 and 20 year periods. The C Fund outperformed by a small amount over the last 10 years.

Despite the S Fund’s historical record of outperforming C, TSP participants invest three times as much in the C Fund as the S Fund.

One disadvantage of the S Fund is that it is more volatile than C. It is the most volatile of the five TSP traditional funds.

Higher volatility may be the reason that TSP participants invest so much more in C than S. It would be interesting to learn your opinion before we discuss this morning at 10 am on Your Turn. We’ll also talk about returns in 2020 and January of this yea, as well as the other TSP issues.

If you have any questions for Arthur Stein, send them to me before showtime.

Nearly Useless Factoid

By Alazar Moges

According to the U.S. Geological Survey (USGS), the length of the International Boundary line of the U.S.-Canadian border, excluding Alaska, is approximately 3,987 miles, while the length of the U.S.-Mexican border is estimated at 1,933 miles. The length of the Alaska-Canada border alone is 1,538 miles.

Source: Federation of American Scientists 

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THRIFT SAVINGS PLAN TICKER

Sep 17, 2021 Close Change YTD*
L Income 23.2077 -0.0415 4.43%
L 2025 12.0240 -0.0418 8.33%
L 2030 42.5522 -0.1952 10.54%
L 2035 12.7953 -0.0643 11.50%
L 2040 48.4773 -0.2641 12.46%
L 2045 13.2947 -0.0772 13.28%
L 2050 29.1552 -0.1795 14.12%
L 2055 14.3671 -0.1053 17.18%
L 2060 14.3671 -0.1053 17.18%
L 2065 14.3671 -0.1054 17.18%
G Fund 16.6644 0.0006 0.88%
F Fund 21.0666 -0.0298 -0.55%
C Fund 66.6676 -0.6128 21.56%
S Fund 85.0861 -0.0794 16.31%
I Fund 39.4469 -0.3006 11.70%
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.