TSP snapshot rate of return


Q. In the March 7 issue of Federal Times, on page 20, there appears the PersonalAdvisor. Part of the feature shows a TSP Snapshot, which has the following entry:

Individual funds  C Fund
March 3           $16.15
Year-to-date      6.18%
Last 12 months    21.34%

Question:  Am I really receiving a 21.34 percent return for funds in the C Fund” for the last 12 months?  I am able to get only 1 percent to 2 percent return on a CD for a year. The 21.34 percent just seems too good to be true!  Am I misinterpreting what I see?

A. The calculated rate of return was correct. Remember that this rate of return only applies to a very specific time period and is not the most likely, or expected, annual rate of return for the C Fund. The difference in rates of return between the C Fund and a one-year CD is largely a reflection of difference in risk between the two. The CD never produces a 50 percent annual loss!


About Author

Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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