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TSP Gained in 2005; Expert Suggests Careful Look at C and G Funds
By Stephen Barr
Thursday, January 5, 2006;
The Thrift Savings Plan, where most federal employees go to build a retirement nest egg, finished on the upswing in 2005. Each of TSP's five funds showed gains.
The international stock index fund ended last year with a 13.63 percent rate of return. The index fund of small and medium-size company stocks showed a 10.45 percent gain.
The large common stock index fund posted a 4.96 percent return; the government securities fund was up 4.49 percent; and the bond index fund grew by 2.4 percent.
The stock indexes, though, did not perform as well as they did in 2004. Only the government securities fund, or G Fund, turned in a larger return in 2005. It had grown by 4.3 percent in 2004.
Numerous federal employees review their investments at this time of the year with an eye to improving their diversification and asset allocations.
Paul Yurachek , a financial adviser with Ameriprise Financial Advisers in Maryland, said federal employees should take a "good, hard look" at the G Fund and the common stock index fund (C Fund) that tracks the S&P 500. Investing in the G Fund will protect savings in a period of rising interest rates, while the C Fund should move upward if large company stocks perform well in the opening weeks of the year, Yurachek said.
TSP participants also will want to look over a relatively new addition to the program, the L Funds. They are shaped by professional managers who seek to increase savings while taking no more risk than necessary.
With L Funds, TSP participants select a fund that most closely meshes with the time that they expect to be drawing down their savings for retirement. Employees with many working years ahead of them see their L Fund shift from aggressive to conservative investments as they near the time they will start withdrawing money. Employees near retirement may choose a fund that minimizes stock holdings and market risks.
The TSP is offered to government employees, including military personnel, as a way to save for retirement and is similar to 401(k) plans offered by many companies. As of October, the TSP had more than 3.5 million participants and more than $166 billion in assets.
By Stephen Barr
Thursday, January 5, 2006;
The Thrift Savings Plan, where most federal employees go to build a retirement nest egg, finished on the upswing in 2005. Each of TSP's five funds showed gains.
The international stock index fund ended last year with a 13.63 percent rate of return. The index fund of small and medium-size company stocks showed a 10.45 percent gain.
The large common stock index fund posted a 4.96 percent return; the government securities fund was up 4.49 percent; and the bond index fund grew by 2.4 percent.
The stock indexes, though, did not perform as well as they did in 2004. Only the government securities fund, or G Fund, turned in a larger return in 2005. It had grown by 4.3 percent in 2004.
Numerous federal employees review their investments at this time of the year with an eye to improving their diversification and asset allocations.
Paul Yurachek , a financial adviser with Ameriprise Financial Advisers in Maryland, said federal employees should take a "good, hard look" at the G Fund and the common stock index fund (C Fund) that tracks the S&P 500. Investing in the G Fund will protect savings in a period of rising interest rates, while the C Fund should move upward if large company stocks perform well in the opening weeks of the year, Yurachek said.
TSP participants also will want to look over a relatively new addition to the program, the L Funds. They are shaped by professional managers who seek to increase savings while taking no more risk than necessary.
With L Funds, TSP participants select a fund that most closely meshes with the time that they expect to be drawing down their savings for retirement. Employees with many working years ahead of them see their L Fund shift from aggressive to conservative investments as they near the time they will start withdrawing money. Employees near retirement may choose a fund that minimizes stock holdings and market risks.
The TSP is offered to government employees, including military personnel, as a way to save for retirement and is similar to 401(k) plans offered by many companies. As of October, the TSP had more than 3.5 million participants and more than $166 billion in assets.