All TSP Funds Decline in Value Except the G-fund

What is the Thrift Savings Plan?

Every U.S. government employee has access to the Thrift Savings Plan (TSP), one of the most efficient and straightforward retirement-saving methods. TSPs are comparable to 401(k)s in certain aspects. If you contribute as an employee, your company may match it. The maximum allowable annual contribution is $18,500, and contributors aged 50 or older are eligible for an additional catch-up contribution of $6,000. 

In recent times, the TSP fund has been fluctuating. This article shall focus on the TSP performance for the month of June.

TSP Performance in June

In June 2022, the federal government’s 401(k)-style retirement savings plan maintained its decline that has lasted almost all of 2022 after briefly rebounding in May.

The I Fund of the TSP experienced the lowest performance in June, plummeting 8.21% due to its investments in international companies. The value of the I Fund is down 18.95% for the first half of this year.

Tracking domestic firms didn’t do significantly better for TSP portfolios. The common stocks held by the C Fund ended the previous month with a loss of 6.55%, bringing the fund’s performance for 2022 to 19.96% in the red. In June, the S Fund’s small and midsize enterprises lost 7.95% of their value. The S Fund has lost 27.92% of its value this year.

The F Fund’s fixed-income securities dropped 1.94% in June, with a cumulative decline of 10.08% in the year’s first half.

The only TSP fund to end June in the black was the G Fund, comprised of government securities and gained 0.29% last month. The value of the G Fund has increased by 1.15% since the beginning of this year.

Last month, negative returns were produced by each of the TSP’s lifecycle (L) funds, changing to more stable investments as participants retire.

Do you worry about the direction of the stock market? 

It appears that there have been more downturns than growth in recent times, causing some investors to be concerned and others to be uneasy. But don’t be alarmed! Market volatility is inevitable, even if it’s a little unnerving. Let’s delve a little more into the problem.

According to a current financial resource, “market volatility occurs for several reasons, including rising interest rates, political events, war, and other unfavorable occurrences.” 

What happens when fluctuation occurs?

Market fluctuation can cause a decline in TSP value that lasts for days, weeks, or even months. Stock prices are always influenced by supply and demand, meaning that when individuals desire to purchase stocks, prices rise, and prices fall when they lose interest.

If you are patient, the bear market downturn will recover. 

Will TSPs recover?

People invest in TSPs because they want to save for their retirement. As a result, they want to know how a market downturn will affect their TSPs.

Take into account first that the current state of the market does not portend a gloomy future for investors. A TSP account encourages investors to maintain their money in place rather than reacting to market fluctuations to avoid the illogical reactions of speculators who can lose money over time.

If there is an economic downturn, the first thing that speculators will want to do is sell their holdings out of worry that prices will continue to decrease. However, when the market recovers, they miss out on the gains. “You will kill your TSP growth if you do this,” specialists say.

Others will put all of their money in the G Fund to be safe, but did you realize the G Fund hardly keeps up with inflation? While this strategy reduces volatility, it may not provide the necessary growth to satisfy retirement goals. As a result, take advantage of the market’s stabilization and patiently ride the ups and downs. In the TSP, you’ll find the lowest-cost index funds and save a lot of money on taxes.

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