Revenge of the G-funders!

When it comes to investing in the Thrift Savings Plan, many advisors warn their federal-military clients against putting most or all in the super-safe Treasury securities G fund. Especially when they are young or in mid-career and have decades to invest. And ride out the ups and downs of the stock market. While it’s true the G fund never has a bad day, it’s been a long time since it had a really good one....

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When it comes to investing in the Thrift Savings Plan, many advisors warn their federal-military clients against putting most or all in the super-safe Treasury securities G fund. Especially when they are young or in mid-career and have decades to invest. And ride out the ups and downs of the stock market. While it’s true the G fund never has a bad day, it’s been a long time since it had a really good one. Even though this year, at 3% interest, it is leading the pack.

Since the federal 401(k) plan, the TSP, started in 1988 the G fund return has been 4.69%. That compares to 5.58% for the bond-indexed F fund which, over time, is a big difference. During the same period, the stock-indexed C, S and I funds have returned 10.80%, 9.08% and 4.68% respectively. Unlike the G fund, which never has a loss, the stock returns included some bad years. Like now, at least so far. And including a 40% nosedive during the Great Recession of 2008-9. That was when many investors either switched money from the stock funds to treasury securities, or also bought only G fund shares when stocks were on sale big time!

For many investors, and their advisors, the issue is safety. Is the G fund “safe” because people never lose principle, or is it unsafe because its mostly modest earnings can be blunted, big time, in times of high inflation. Like now. Using the same “safety” issue, some advisors warn that a nest egg based on low-yield returns can be dangerously eroded during periods of high inflation. The Wall Streets highly respected Heard-on-the-Street column warns investors they could be in for a long slide.

Professionals make it a point to say past performance is no guarantee of future performance. And it’s not. But if you check out the numbers it can be an indicator. And many people are wondering what (if anything) to do as the stock market and inflation dominate so much of the news cycle. So if you don’t know where we are going, which nobody does, you can at least look where we’ve been. And, again, what if anything that means. So here are the official numbers long range and short range, showing where the five primary funds have been to date. Here are the numbers:

Year G Fund F Fund C Fund S Fund I Fund
Inception date 4/1/1987 1/29/1988 1/29/1988 5/1/2001 5/1/2001
1 year 1.63% -8.31% 0.21% -18.75% -8.87%
3 year 1.45% 0.46% 13.80% 8.59% 4.38%
5 year 1.93% 1.30% 13.62% 9.33% 4.90%
10 year 1.94% 1.98% 13.68% 11.25% 6.01%
Since inception 4.69% 5.58% 10.80% 9.08% 4.68%
2022 YTD 0.65% -9.33% -12.91% -18.83% -12.73%
2021 1.38% -1.46% 28.68% 12.45% 11.45%
December 0.12% -0.32% 4.48% 0.58% 5.10%
November 0.13% 0.30% -0.69% -5.03% -4.66%
October 0.13% -0.04% 7.00% 5.43% 2.46%
September 0.11% -0.86% -4.65% -4.00% -2.81%
August 0.11% -0.18% 3.03% 2.00% 1.76%
July 0.13% 1.15% 2.37% -1.24% 0.72%
June 0.12% 0.74% 2.33% 3.46% -1.44%
May 0.13% 0.34% 0.69% -0.66% 3.61%
April 0.13% 0.82% 5.33% 4.23% 3.09%
March 0.11% -1.23% 4.38% -0.39% 2.35%
February 0.08% -1.45% 2.76% 5.21% 2.26%
January 0.07% -0.71% -1.01% 2.85% -1.09%
2020 0.97% 7.50% 18.31% 31.85% 8.17%
2019 2.24% 8.68% 31.45% 27.97% 22.47%
2018 2.91% 0.15% -4.41% -9.26% -13.43%
2017 2.33% 3.82% 21.82% 18.22% 25.42%
2016 1.82% 2.91% 12.01% 16.35% 2.10%
2015 2.04% 0.91% 1.46% -2.92% -0.51%
2014 2.31% 6.73% 13.78% 7.80% -5.27%
2013 1.89% -1.68% 32.45% 38.35% 22.13%
2012 1.47% 4.29% 16.07% 18.57% 18.62%
2011 2.45% 7.89% 2.11% -3.38% -11.81%
2010 2.81% 6.71% 15.06% 29.06% 7.94%
2009 2.97% 5.99% 26.68% 34.85% 30.04%
2008 3.75% 5.45% -36.99% -38.32% -42.43%
2007 4.87% 7.09% 5.54% 5.49% 11.43%
2006 4.93% 4.40% 15.79% 15.30% 26.32%
2005 4.49% 2.40% 4.96% 10.45% 13.63%
2004 4.30% 4.30% 10.82% 18.03% 20.00%
2003 4.11% 4.11% 28.54% 42.92% 37.94%
2002 5.00% 10.27% -22.05% -18.14% -15.98%
2001 5.39% 8.61% -11.94%
2000 6.42% 11.67% -9.14%
1999 5.99% -0.85% 20.95%
1998 5.74% 8.70% 28.44%
1997 6.77% 9.60% 33.17%
1996 6.76% 3.66% 22.85%
1995 7.03% 18.31% 37.41%
1994 7.22% -2.96% 1.33%
1993 6.14% 9.52% 10.13%
1992 7.23% 7.20% 7.70%
1991 8.15% 15.75% 30.77%
1990 8.90% 8.00% -3.15%
1989 8.81% 13.89% 31.03%
1988 8.81% 3.63% 11.84%

Nearly Useless Factoid

By David Thornton

In Tibet, sticking out your tongue is a traditional greeting.

Source: BBC

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