Past TSP performance

This month you have a special opportunity to review your investments in the 401k-style Thrift Savings Plan. Until recently, TSP participants had only three choices for paycheck contributions. But as of May 1, you now have five choices. You can log in to your TSP account at www.tsp.gov any time this month to change the way your future contributions are divided among the TSP's five funds: the old G Fund, which invests in government securities; the old F Fund, which invests in bonds; the old C Fund, which invests in large company stocks; the new S Fund, which invests in small- and mid-sized company stocks; and the new I Fund, which invests in international stocks. But before you start shifting your money around, take some time to get to know the I and S Funds and reacquaint yourself with the C, F and G Funds. The new Summary of the Thrift Savings Plan for Federal Employees booklet provides a basic description of each of the five funds. In addition, this column introduced the I Fund on March 1 and the S Fund on March 8. Now let's look at the past performance of the five funds. Remember that past performance doesn't necessarily predict future performance. Who knows what will happen to the stock market in the coming years? Remember also that administrative expenses are deducted from your TSP account, so the numbers we come up with probably won't match the numbers on your TSP statement. But looking at past performance can help you make good decisions. For example, knowing that the G Fund has always returned between 0.4 percent and 0.8 percent every month for the past 10 years tells you that it's not a risky investment, nor is it likely to make you incredibly rich. The more volatile monthly returns of the C, S and I Funds tell you that there's more risk involved with each of them than with the G Fund, but that they offer the chance for greater returns. To examine the funds' past performance, Pay and Benefits Watch created a crude worksheet using Microsoft Excel. (You'll be able to download the worksheet at the end of this column.) Then we downloaded the monthly returns for each of the five funds from January 1990 to April 2001. We got the C, F and G returns from the TSP Web site. Because the I and S Funds are debuting this month, we used the historical returns for the stock indexes that the two funds will track. The S Fund will track the Wilshire 4500, for which historical returns are published on the Wilshire Web site. (Wilshire, by the way, was founded by space tourist Dennis Tito.) The I Fund will track the Morgan Stanley Europe, Australasia and Far East (EAFE) index, for which returns are published on the Morgan Stanley Web site. After we downloaded and entered the monthly return rates into the worksheet, we created a formula to see what would happen if we contributed a certain amount of money (X dollars) to each fund each month. The formula allowed us to test out various investment scenarios. We started out investing $100 in each of the funds each month. The worksheet showed what our account balance could have been at the end of each month. At the end of April 2001, after investing $100 per month in each of the funds since January 1990, the value of our account would have been:

1. Download the Excel worksheet, TSPchart.xls. (You have to have Microsoft Excel 2000 to use it. If you have an earlier version of Excel, try 95chart.xls.)
2. Save it to your computer.
3. Open the worksheet in Excel.
4. Look in the area that is shaded light blue. You'll see that we have entered $100 into each of the five funds. That means we're pretending to invest $100 per month from January 1990 through April 2001 in each of the funds.
5. Look in the area that's shaded yellow. You'll see the balance in each of the funds at the end of the 1990-to-2001 period after the investment of $100 per month. You'll also see a total for the five funds combined ($ 121,970.46).
6. Look in the area that's shaded purple. You'll see the monthly percentage return for each of the funds. Why monthly? Because that's how frequently the TSP updates participants' accounts.
7. Look in the area that is shaded green. You'll see the monthly fund balance based on the monthly investment of $100 and the monthly percentage return listed in the purple area.
8. To try out various investment strategies, change the dollar figures in the light blue area and hit return. You'll see changes in the total balances in the yellow area, as well as the monthly balances in the green area.