Q. I purchased the Thrift Savings Plan F Fund in September 2012 and, by Dec. 31, it had risen from 15.84 to 16.01, basically matching my expected returns. However, in 2013, it lost 1.63 percent of its value. It had never lost before in the 10-year listings of annual returns. How is it possible the lose money? Interest rates have been low for many years now and any 1- to 3-year bonds would have reflected these record low interest rates at bond purchase time. Why is the fund losing?
A. When market interest rates rise, the value of existing bonds falls. If the decrease in the market value of the bonds is greater than the interest they pay over a given period, a loss occurs. Losses in market value are an inherent risk of owning bonds.