Some experts predicted that December was on the dark side and was about to be the worst ever experienced December since 1931. 2018 was a year of unpredictability, which had many investors unsure of what to expect especially those that were in the process of investing in something that would give them long-term returns through their retirement, approximately 20 to 30 years.
Arthur Stein, a financial planner, has lots of active and retired feds as clients, and some of them are even TSP millionaires. He claimed that the year’s TSP C and F return reminded him of when Shakespeare described life in Macbeth:
“It is a tale … full of sound and fury, signifying nothing.”
After an unstable and unpredictable period for the C fund (S&P 500 stocks), and a declining year for the F fund (intermediate-term bond index), very few things have changed. Everything is still unstable. By Dec 13, the C fund had increased by less than 1 percent while the F fund had declined by less than a percentage. Nothing much exciting happened throughout the year.
The stocks for small and medium-sized businesses, represented by ‘S’ and international stock represented by ‘I’ funds have shown more dramatic and negative results. The two funds declined at a shockingly high rate, with the (S fund) going down by up to 4.2 percent and the (I fund) decreasing by 10.8 percent.
The G fund was the best performer of the year, having yielded an increase of 2.8 percent.
What does this mean for investors? The way these changes will affect you depends on your specific financial situation. Take an example of a case where one is 62years old, retired and already making TSP withdrawals for Social Security and annuity supplements. This type of person should be worried.
If you are at least ten years from your retirement, you should not be worried as these changes may have no or very slight impact on your finances.
If you wish to learn and understand more about the recent TSP performance and how these performances can impact your investment plans, be sure to reach out to your financial advisor.