Calculating TSP returns


Q. In the Federal Times October print issue your column “Finding the best Thrift Savings Plan strategy” raises some good funds allocation concerns for investors … but how the heck does the average federal employee go about calculating the ER and the SDR? Or simply where might someone look to find formulas to make such calculations?

A. In the limited space I had available, I was trying to draw your attention to the kind of information you need to responsibly manage an investment portfolio for retirement income. It seems to have worked. Unfortunately, calculating a statistically rigorous expected return and standard deviation of returns is not easy, and must be done every year or so to keep it up to date. I obtain the necessary data – which includes historical investment returns going back to 1926 – and make the calculations myself. That way, I know that I can trust the assumptions and be confident that the ER and SDR I am using is appropriate for my purpose.


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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 and view his blog at

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