TSP Snapshot: What goes up does go down

By Max Cacas
Federal News Radio

Just like a roller coaster, the Thrift Savings Plan has had its ups….and now it’s had its downs. Last month the TSP experienced its first downturn in over a year, but analysts say it’s not time for feds with their retirement funds to panic — not yet.

Paul Yurachek, with Ameriprise Financial Services in Bethesda, says there were two key areas that affected the TSP in the month of May.

All the stock funds really got whacked big time. The C fund was down almost 8 percent. The S fund down almost 7 1/2, and the I fund down almost 11.2 for the month, so big drops. There are two things, and let’s start with the one people should be the least concerned about. After a year, almost 14 months, of going straight up, the stock market took a breather. When you have raging bull markets, its typical for the market to have a slight correction along the way. So part of it could be thought of as a correction. That’s a healthy thing, if prices are running ahead of where they belong, its helps it adjust back.

Yurachek says the second factor in May’s TSP downturn was last month’s “flash crash”, as he calls it, in which the Dow lost a thousand points in 15 minutes.

“That scared everyone half to death,” he said. “And perhaps the most frightening about all of it is they still have not identified what made that happen. That said, I think it made people leery of stocks in general. So, what you saw was the C fund, which tracks the S&P, took a big plunge. And so for the month, ended up exactly the same as the S&P 500, down 7.99%. The S fund went down 7.5, but its still the only one of the stock funds that positive for the year, its still up 6 and a half percent for the year. And the I fund dropped 11.2, and that could be attributed to a lot of things, like what’s going on in Europe.”

Looking at the L funds, Yurachek says diversity helped cushion the blow of the May downturn.

“The 2040, which is the most aggressive, about 85% stocks, was down 7%, down just about what the S&P index was. If you take 85% of the S&P index, you get minus 6.8, and it was down 6.97. The went in lockstep, the 2030 down just over 6, the 2020 down 4.98, the 2010 down 1.64, and the income fund down 1.5 . So last month, they were all down, and that’s just because all your stock market indices are down.”

Yurachek says the 2020 and 2030 funds are still good funds for investors, and if he was a fed, “I’d have half my money in 2020 and half in 2030, and then I wouldn’t worry about it anymore.”


For more from Certified Financial Planner Arthur Stein on what’s ahead for the TSP, click here.

(Copyright 2010 by FederalNewsRadio.com. All Rights Reserved.)


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May 07, 2021 Close Change YTD*
L Income 22.8920 0.0535 2.39%
L 2025 11.7696 0.0557 4.76%
L 2030 41.4554 0.2531 6.01%
L 2035 12.4413 0.0833 6.56%
L 2040 47.0488 0.3431 7.12%
L 2045 12.8823 0.1007 7.60%
L 2050 28.2076 0.2349 8.10%
L 2055 13.8383 0.1393 10.05%
L 2060 13.8382 0.1392 10.05%
L 2065 13.8381 0.1393 10.05%
G Fund 16.5792 0.0006 0.40%
F Fund 20.7154 -0.0008 -2.55%
C Fund 63.3169 0.4739 11.83%
S Fund 82.1564 1.0665 12.34%
I Fund 38.7555 0.4941 6.73%
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.