TSP update for last month: All funds except F post positive returns.
Similar to the moves of June and July earlier this year, when the market had significant losses in June, followed by an upward move in July; September and October were months of losses followed by significant gains. Overall, the market continues to be down overall for the year to date, but these significant monthly swings demonstrate why it is so important to have a defined investment strategy and be disciplined during times of market volatility.
The Federal Reserve continued its march towards higher interest rates in its ongoing battle with persistent high inflation, raising interest rates by .75 basis points for the fourth time this year this week. Weary TSP investors have continued to flee the markets, continuing to move money into the G fund. It is estimated that investors moved about $3.668 billion into the G fund in September. While this is a small percentage of the over $689 billion invested in TSP at the end of September. (Fedsmith.com, November 1, 2022), it is still concerning. Historical data show that moving in and out of the funds generally hurts a TSP participants long term performance.
The IRS announced the new limits for contributions to TSP in 2023. The maximum amount a participant under age 50 can contribute is $22,500. This is an increase of $2000 over the 2022 limit. In addition, the catch-up limit is $7,500 for those age 50 and over. The total contribution for employees over age 50 for 2023 is $30,000. This is great news for retirement savers.
Having a disciplined investment strategy and sticking to it through good times and bad has been shown to produce long term investor success. If you are unsure how to create an investment strategy that you can stick to, there are many resources available to you via Serving Those Who Serve. Start by registering for an upcoming TSP webinar on the Serving Those Who Serve website. Register Here
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 | 2.55% | -15.40% | -14.61% | -27.24% | -22.74% |
| 2022 YTD | 2.29% | -15.38% | -17.70% | -23.83% | -22.90% |
| 2022 Monthly | |||||
| October | 0.34% | -1.26% | 8.10% | 8.59% | 5.98% |
| September | 0.28% | -4.31% | -9.21% | -9.91% | -9.40% |
| August | 0.25% | -2.80% | -4.08% | -2.08% | -5.79% |
| July | 0.26% | 2.47% | 9.22% | 10.32% | 5.15% |
| June | 0.29% | -1.94% | -6.55% | -7.95% | -8.21% |
| May | 0.21% | 1.13% | -1.65% | -3.53% | 1.19% |
| 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 October 31, 2022. (source, TSP.gov).
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| 1 year | 2.55% | -15.40% | -14.61% | -27.24% | -22.74% |
| 3 Year | 1.65% | -3.62% | 10.18% | 6.45% | -0.99% |
| 5 year | 2.03% | -0.42% | 10.41% | 6.28% | 0.24% |
| 10 year | 2.04% | 1.00% | 12.80% | 10.54% | 4.46% |
| Inception Date | 4/1/1987 | 1/29/1988 | 1/29/1988 | 5/1/2001 | 5/1/2001 |
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**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.***
