STWS Advisor Jennifer Meyer provides her TSP Update for the month ending April 2022
There is no way to hide from the fact that April 2022 was ugly for markets overall, which accordingly means that millions of TSP participants will be feeling some pain when they look at their TSP accounts at the end of the month. Just one short (but very long) month ago, I wrote that March brought TSP participants some relief from the downward spiral in their accounts over the first two months of the year. That trend reversed in April. This is why it is so important to not react to weekly and even monthly trends in the market. Data shows what matters most is “time in the market” not “timing the market”. Focusing on the longer-term trends should reassure investors that their TSP strategy (assuming they have one), is sound and reliable. Remember that your TSP must last you through years and hopefully decades of retirement. Reacting to short-term market trends is not an effective long-term strategy. For the month, the widely held C fund, which closely tracks the S & P 500 was down 8.72% for the month. Each of the L funds were negative for the month, but all remained in the negative for the year-to-date period.
May 2022 will bring another meeting of the Federal Reserve which is almost certainly going to continue its cycle of raising interest rates. Following the March meeting, markets rallied to end the month. Time will tell if the same response is in store for the upcoming weeks. The ongoing war in Ukraine continues to be a headwind for markets, providing a high level of uncertainty to global markets. World leaders, including President Biden, are working to manage the economic and human impact of the war. The hope for a short war has largely been replaced with the expectation of a prolonged conflict.
Performance figures for the month of April 2022 have been posted on the TSP website. Monthly returns from 2022 and year-to-date returns for 2022 and longer-term averages are shown below. (source, TSP.gov)
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| Last 12 months | 1.63% | -8.31% | 0.21% | -18.75%% | -8.87% |
| 2022 YTD | 0.65% | -9.33% | -12.91% | -18.83% | -12.73% |
| 2022 Monthly | |||||
| April | 0.20% | -3.75% | -8.72% | -10.57% | -6.39% |
| March | 0.17% | -2.73% | 3.72% | 0.90% | -0.33% |
| February | 0.14% | -1.08% | -2.99% | 0.03% | -2.61% |
| January | 0.13% | -2.09% | -5.18% | -10.07% | -3.96% |
Month-to-month trends as shown above are interesting, but it is important to remember that short-term market volatility is to be expected and employees should not be making investment decisions based on short-term performance. Following are longer-term rates of return for each fund, as of April 30, 2022. (source, TSP.gov).
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| 1 year | 1.63% | -8.31% | 0.21% | -18.75% | -8.87% |
| 3 Year | 1.45% | 0.46% | 13.80% | 8.59% | 4.38% |
| 5 year | 1.93% | 1.30% | 13.62% | 9.33% | 4.90% |
| 10 year | 1.94% | 1.98% | 13.68% | 11.25% | 6.01% |
| Inception Date | 4/1/1987 | 1/29/1988 | 1/29/1988 | 5/1/2001 | 5/1/2001 |
A reminder that the TSP has announced several changes to its offering in 2022. Beginning the week of May 16th, TSP will be suspending certain transactions, and there will be a timeframe where there will be no transactions at all permitted from May 26th to the first week of June. Also, we are closely watching for any news regarding the new mutual fund window coming later this year. This will allow TSP participants to access funds outside of the core 5 funds and their L fund counterparts, for a fee. Here is an article by my teammate, Benefits Ben regarding the mutual fund window.
Finally, one of the most common sources of confusion we see is the decision regarding Roth versus Traditional TSP. Keep in mind there are no income limits on Roth TSP as there are with Roth IRA! I mentioned earlier how important it is to have a TSP strategy. If you do not have one, or do not feel confident in yours, our advisors are happy to help. All federal employees are encouraged to make an appointment for a complimentary consultation via the Serving Those Who Serve website (www.stwserve.com).
Please reach out to us with questions and follow our website for the most recent updates. We also run a monthly TSP webinar focused on education and presented by federal benefits expert, Ed Zurndorfer. Here is a link to our upcoming webinars. https://stwserve.com/webinars-and-seminars/webinars-for-federal-employees/
**Written by Jennifer Meyer, Financial Planner. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Jennifer Meyer and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
***The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. The TSP is a defined contribution plan, meaning that the retirement income you receive from your TSP account will depend on how much you (and your agency or service, if you’re eligible to receive agency or service contributions) put into your account during your working years and the earnings accumulated over that time. The Federal Retirement Thrift Investment Board (FRTIB) administers the TSP.***
