Why is the TSP F fund losing money?
If interest rates rise, how much can the F Fund lose? The longer a bond's duration, the greater the volatility and potential losses when interest rates change. The F Fund holds thousands of bonds of various durations.
Its yield to maturity hovers around 2.3%, and the average coupon is 4.1%. The average maturity is 7.3 years, and the average duration is 5.1 years.
The overall risk is relatively low in comparison to certain other fixed income investments in the market because the F Fund includes only investment-grade securities. Am I ok with market and inflation risk? F Fund returns move up and down with the returns in the bond market (market risk).
Since the G Fund eliminates the risk of loss in value and promises rates of interest that are similar to medium-term Treasury bonds, it's essentially like holding a risk-free midterm Treasury bond fund. The F Fund tends to hold about 20 percent of its assets in short- and medium-term Treasury bonds.
C Fund is Best Performing TSP Fund Over 12 Months
Among the core TSP funds, the fund with the worst performance over the past twelve months is the S Fund which is down 5.31%. The G Fund is up 1.56% over the past twelve months. The S Fund also finished the month with a positive return of 0.90%.
But isn't the F Fund a safe fund? From the tsp.gov website you can learn that the F Fund has so far compounded at 7.0 percent per year since first becoming available in January 1988. And it has done so with a tolerable maximum drawdown of -6.6 percent.
C Fund is Roaring—Top TSP Core Fund in 2021
As this index fund is the one on which the C Fund is based, the C Fund did well also. The C Fund was up 3.03% in August—the highest return of any core TSP Fund for the month. August was the best month for the C Fund since it returned 5.33% in April.
The G Fund is up 1.15% so far in 2022. That is normally not a great return, but it is the only TSP fund with a positive return in 2022. The G Fund serves as a source of relative calm in a volatile market.
The G Fund is invested in short-term U.S. Treasury securities specially issued to the TSP. Payment of principal and interest is guaranteed by the U.S. government. Thus, there is no “credit risk.”
Even the TSP, the federal 401(k) plan, recognizes this problem of inflation. The G Fund's stated objective is to keep pace with inflation. It is invested in short-term U.S. Treasury securities. Yet the most conservative of the TSP's Lifecycle Funds — the L Income Fund — still has 23% of its balance in stocks.
How can I protect my TSP from the market crash?
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How can I protect myself?
- Don't overreact. ...
- Revert to the “buying high and selling low” methodology. ...
- Make sure your portfolio is diversified. ...
- Consider your risk tolerance.
The next obvious question is “Does this change my future contributions?” No – Interfund Transfers only impact the balance you already have invested in the TSP.
Let's be clear. You do earn TSP dividends. In fact, you'd get the same amount of dividends that you'd get from any similar stock index fund. However, in the TSP's effort to reduce administrative expenses, the dividends are automatically reinvested.
Dave Ramsey's advice is to save 5% into the TSP to get the full match, then max out a Roth IRA, and then put more into the TSP if you are able to save more after that.
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TSP Performance as of April 26, 2022.
Increase your contributions each year
Most people don't start contributing the maximum their first day on the job, therefore it is important to increase your contributions as you start to make more. Every time you receive a COLA or a step increase you should consider increasing your TSP contributions.
How much will my TSP grow after retirement? When the Federal Employees Retirement System was created, experts said the TSP would be critical because, along with social security and a changed public annuity, the TSP could provide as much as 30% to 50% of the retiree's total income.
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.
The G Fund is up 1.15% so far in 2022. That is normally not a great return, but it is the only TSP fund with a positive return in 2022. The G Fund serves as a source of relative calm in a volatile market.
On the opposite side of the volatility spectrum, the S Fund (small cap U.S. stocks) has the largest annualized standard deviation: 21.44% as of this writing, and is therefore the riskiest.
Which TSP fund is best for inflation?
Even the TSP, the federal 401(k) plan, recognizes this problem of inflation. The G Fund's stated objective is to keep pace with inflation. It is invested in short-term U.S. Treasury securities. Yet the most conservative of the TSP's Lifecycle Funds — the L Income Fund — still has 23% of its balance in stocks.
The G Fund is invested in short-term U.S. Treasury securities specially issued to the TSP. Payment of principal and interest is guaranteed by the U.S. government. Thus, there is no “credit risk.”
