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The robust stock market has done wonders for the optional retirement accounts of millions of active and retired federal and military investors.
Their Thrift Savings Plan (TSP) offers funds covering the entire U.S. stock market and an international index fund, as well as a bond fund and a special Treasury securities fund.
But when the market dipped briefly led by problems in China in February and March, thousands of feds fled the U.S. and international index funds. They transferred millions of dollars into the super-safe G Fund, which is unique to the TSP because it is made up of Treasury securities that are not available to the general public.
Those considering a return to the C Fund, which tracks the S&P 500, or the red-hot I Fund, an international stock index fund, will, in effect, be guilty of selling low (when the market was temporarily down) and buying high, in hopes of cashing in on the rise in the C and I funds.
Past performance, as the pros say, is no indication of where the stock market will go in the future. But for many people, it is a helpful guide. So we asked the Federal Retirement Thrift Investment Board, which runs the TSP, to run some numbers. The question was this: If you invested $10,000 in the C Fund and the G Fund over the past decade, what would you have gained or lost each year? This is what it looks like:
In 1996, when the markets were similarly hot, $10,000 invested in the G Fund would have grown to $18,262, or to $29,853 if invested in the higher risk, higher reward C Fund. That is a difference of $11,591 by investing in the C Fund.
In 1997, $10,000 invested in the G Fund would have grown to $17,106. If invested in the C Fund, it would have become $24,301.
In 1998, $10,000 invested would have grown to $16,022 in the G Fund or $18,248 in the C Fund.
In 1999, when the market starting cooling off, a $10,000 investment would become $15,152 in the G Fund or $14,207 in the C Fund. One way to view it is that, thanks to the drop in the market, the C Fund went on sale. It took fewer dollars to buy more shares.
In 2000, $10,000 would have become $14,296 in the G Fund or $11,746 in the C Fund. The sale continued.









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