TSP Investors See Rough Patches In Current Market Trends; Is A Change Coming?

It appears that the stock market including the Thrift Savings Plan account has been in a tough place lately. The performance levels seen in 2017 have yet to see the same levels in 2018. For those with TSP accounts, you may be wondering what’s going on. And, if the trend for the TSP is going to continue for the remainder of 2018?


There are several theories goingaround, but Arthur Stein is a Washington area financial planner.


Federal employees with a FERS retirement plan willlikely to see their TSP investment supply between one-third and one-half of the money they will spend in retirement.  Thisis a lot of money. The majority of Stein’s clients are current or retired federal employees. Quite a few of them have become TSP millionaires who stuck with the investment through good and bad times, investing in the TSP’s stock-indexed S and C funds.


Stain said the marginal negative returns and high volatility of 2018’s first quarter ismuch different than what was seenin 2017. And, for those wanting to know why,there is no clear-cut answer.


According to Stein, several issues couldbe negatively impacting the markets. For example, there’s the possibility of a trade war between the U.S. and China. He said interest rates are also higher with the likelihood of higher rates later on. Stein said the U.S.’ ongoingpolitical upheaval is also adding some negative to the market.


Stein said the news isn’t all bad. For people wanting some positive trends to go by, he said to consider the following:


  • The global economy is still growing
  • Corporate earnings could get a boost due to the continued financialgrowth and tax cuts
  • Interest rates and inflation are still very low


He said none of this reallygives a picture of what the future will return. He said the one, five, and 10-year average returns are great, butif the stock market were to take a dive, it would not be totallyunexpected. Stein said it’s likely to see a drop of at least 20 percent before corrections are made. He continued saying the stock market is about nine years overdue for a correction. Thiscould be happeningnow and sometime later, but people invested in the TSP must be mindful of the possibility of this happening.

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