TOPICS
TOPICS
March a solid month for TSP returns
The three riskiest funds in the Thrift Savings Plan posted the greatest gains for March, while one of the more conservative funds had no movement and the other made just small gains.
The I Fund, which invests in international stocks, grew the most, at 2.57 percent. March's growth brings the fund's 12-month gains to 20.22 percent -- also the highest increase of any fund over that period.
The C Fund, which tracks the Standard & Poor's 500 Index, gained 1.09 percent for March, bringing the 12-month increase to 11.83 percent.
The S Fund, which invests in the stocks of small- and mid-sized American companies, also grew 1.09 percent last month. The fund tracks the Dow Jones Wilshire 4500 Index, which invests in the 4,500 next largest domestic companies after the 500 tracked by the C Fund. The S Fund's 12-month gains stand at 9.30 percent.
The government securities, or G Fund, which is the most reliable TSP fund, earned 0.42 percent last month for a yearlong 5.05 percent increase.
The fixed-income bonds included in the F Fund made no movement in March, placing them at the bottom of the pack for the month. But the fund came in with 6.6 percent gains for the year, placing it ahead of the G Fund.
All of the TSP's life cycle fund options, which automatically adjust as investors near their target retirement date, grew this month. Those designed for younger employees posted the greatest gains, because they invested more heavily in the I, C and S funds.
The L 2040 fund, designed for TSP participants anticipating retirement around the year 2040, grew 1.34 percent. The L 2030 Fund gained 1.16 percent; the L 2020 rose 1.08 percent; the L 2010 increased 0.89 percent; and the L Income, designed for employees with planned retirements in the very near future, gained 0.62 percent.
March's performance marked a reversal from February, when a steep drop in the Dow Jones industrial average caused slight losses among the funds that have grown the most over the past year.
COMMENTS
- We really need an answer to TIPs question about reducing income with tax deferred contributions. I have received answers both ways. You reduce SS payments because taxable income falls and the SS benefit is calculated on the lower taxable income figure. However, if you contribute the maximum to SS why would your benefits fall? TIP, if you contribute to TSP it is my impression that your SS benefits fall based on your taxable income and not your total income but I cannot get this confirmed for sure - I have answers both ways from social security and the IRS. No one seems to know for sure! opther considerations, I suggest you invest in the I fund. Excessive USA debt continues to drive the US dollar lower and lower. Investing in foreign stocks causes return even if the foreign stocks do not increase or actual decrease at a rate below the decilne in the US dollar. Four years ago the EURO cost $0.84 and now it costs $1.3477. For ever dollar you invested in a EURO valued stock four years ago you see a profit of $0.50 or 50% f the EURO stock did nothing. Similar things happened with the pound sterling, the yen and Chinese currency. The return on the I fund should continue strong because of the decline in the dollar should continue as long as Congress continues to spend and devalue the dollar. What the FED does is irrelevant, but what the FED does relative to other central banks is relevant. If our Fed decreases rates and everyone else holds steady the dollar should drop even more. Go for the I fund but it is getting riskier because once the USA goes into recession our purchase of foreign goods will decline and cause foreign stocks to decline faster than the value of the dollar. I still go for I but watch the state of US purchases abroad for signs of a significant slowing then it is time to move into the G fund and wait for the foreign purchases by US to bottom out. Once it bottoms out go back into the I fund. This is not a month by month movement but a movement over the cycle of business. taxpayer Posted April 9, 2007 8:10 AM
- I've been concerned that in recent years on checking my EBIS retirement benefits, the listed Social Security Retirement Benefits have been steadily dropping as my income went up. Perhaps this is a stupid question but does anyone know if contributing to TSP in ever greater amounts, thus lowering your taxable income, subsequently lowers your Social Security benefits? This is the only logical explanation I can think of for the downward spiral. If such is the case, is there a breakpoint where the trade off becomes a negative action? Does this actually limit the benefits of sheltering your income for the later years? Brittany? Numbers? Anyone? Thanks, as always. Tip off GovExec.com reader Posted April 6, 2007 8:17 AM
- Solid month for growth? Who writes this stuff? I took in on the chin over the last two months. As for RSSA, man, that is scary. If TSA ever responds would you share the answer with the rest of us? Phil Posted April 5, 2007 3:31 PM
