TSP Update for Month Ending August 2023: while all TSP funds had a poor month, all funds but F are up over the last 12 months.
For TSP investors, August delivered a pull back on what has been a hot first half of the year for the stock market. The C fund, which mirrors the S & P 500 index, had its first negative monthly return since February of this year. The only fund, including the L funds, to post a positive return for the month was the G fund. This begs the question, is the rally of 2023 simply on pause or is this the start of another downturn for markets? I am often asked to predict short term stock market performance. Those who know me know my answer is always, I do not know what the short term holds. I do know that the best way to minimize risk and maximize return is by diversifying across asset classes and being disciplined through periods of market volatility (discipline= not moving in and out of funds due to market volatility).
August is historically a quiet month for markets with many investors and traders enjoying the last weeks of summer. The Fall has historically been a volatile time, both to the upside and downside as some investors begin looking for tax opportunities as the year end nears, and companies also are looking for opportunities to improve bottom lines going into year end.
For most market participants, the actions of the Federal Reserve continue to be important for near term returns. Speculation swirls as to whether the Fed can manage the “soft landing” they seek. A soft landing would mean the Fed has successfully brought inflation down, without sending the U.S. economy into a recession. They will be paying close attention to upcoming inflation and unemployment numbers as they consider future rate hikes. Most economists agree that unless inflation shows signs of heating up again, the Federal Reserve should keep rates where they are for now. In an economy the size of the U.S. it takes time for the rate increases of the last 18 months to work through the system.
For federal employees, successful management of your TSP will have a huge impact on your retirement picture. The alternative is also true, the poor management of your TSP will have a huge impact to the downside. Do not delay becoming educated as to how the maximize this critical component of your retirement. If you have questions on how to best manage your TSP, please schedule a complimentary meeting or attend a TSP webinar. You can find the schedule here.
Monthly and year to date returns effective August 31, 2023, and longer-term averages are shown below. (source, TSP.gov)
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| Last 12 months | 3.95% | -1.17% | 15.91% | 8.39% | 18.78% |
| 2023 YTD | 2.62% | 1.53% | 18.71% | 14.45% | 10.83% |
| 2023 Monthly | |||||
| August | 0.35% | -0.63% | -1.58% | -4.06% | -3.90% |
| July | 0.34% | -0.07% | 3.21% | 5.91% | 2.82% |
| June | 0.32% | -0.36% | 6.61% | 8.31% | 4.57% |
| May | 0.31% | -1.10% | 0.43% | 0.44% | -4.01% |
| April | 0.30% | 0.61% | 1.56% | -2.18% | 2.87% |
| March | 0.35% | 2.55% | 3.67% | -2.90% | 3.11% |
| February | 0.28% | -2.58% | -2.44% | -1.63% | -2.84% |
| January | 0.34% | 3.25% | 6.28% | 10.82% | 8.43% |
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 August 31, 2023. (source, TSP.gov).
| Year | G Fund | F Fund | C Fund | S Fund | I Fund |
| 1 year | 3.95% | -1.17% | 15.91% | 8.39% | 18.78% |
| 3 Year | 2.41% | -4.25% | 10.50% | 5.46% | 6.33% |
| 5 year | 2.24% | 0.58% | 11.09% | 5.19% | 4.45% |
| 10 year | 2.23% | 1.72% | 12.81% | 9.17% | 5.27% |
| 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.***
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