The Thrift Savings Plan (TSP) is a retirement savings and investment plan for federal employees and members of the military. It is known for its low fees and diverse investment options, making it an attractive choice for many. However, like any investment, the TSP is not immune to market fluctuations, and it is possible for your TSP account to experience losses. Here are some reasons why your TSP may be losing money:

1. Market Volatility: The performance of the TSP is directly influenced by the stock and bond markets. If the markets experience downturns or volatility, your TSP investments may lose value.
2. Economic Factors: Economic factors such as inflation, interest rates, and geopolitical events can impact the performance of your TSP investments. Negative economic conditions can lead to losses.
3. Asset Allocation: The way you allocate your TSP investments among different asset classes, such as stocks, bonds, and government securities, can affect the overall performance of your account. If your allocation is not well-balanced or in line with your risk tolerance, it may result in losses.
4. Individual Investment Choices: If you have chosen specific funds within the TSP that are underperforming or facing challenges, it can impact the overall performance of your account.
5. Timing of Contributions and Withdrawals: If you make contributions or withdraw funds from your TSP account during a market downturn, it can affect the value of your investments.
6. Fees and Expenses: While the TSP has low fees compared to many other retirement plans, fees and expenses can still impact your overall returns and potentially lead to losses.
7. Lack of Diversification: If your TSP investments are concentrated in a few funds or asset classes, you may be exposed to higher risks. Diversification across different investments can help mitigate losses.
8. Long-Term Perspective: It’s important to remember that the TSP is a long-term investment vehicle designed to grow over time. Short-term losses are a normal part of investing, and it’s crucial to focus on the overall performance of your account over the long term.

FAQs:

1. Can I lose all my money in the TSP?
   No, the TSP is a diversified investment plan that spreads your money across various asset classes, reducing the risk of losing all your money. Click HERE to read more.

These are pros and cons of moving money from the TSP after retirement.

“Should I Stay or Should I Go?” by The Clash. if you bopped to this song in high school or college, you are most likely in sight of retirement so this is an important topic. But, even if you know this from jeans or hotel commercials, this is worth a read.

In their wisdom, the Clash sang, “If I leave there will be trouble… If I stay there will be double.” Not a bad metaphor for making the stay-or-go TSP (Thrift Savings Plan) decision. But like so many things, the devil is in the details.

At the outset, I need to give a shout-out to Ian Smith from FedSmith. A few months back I asked him what big question his readers had, and this topic was the #1 answer.

I want to be clear, my goal in this article is NOT to give advice on your individual decision to transfer out of TSP or to leave your funds there. Rather, I hope to offer a list of unvarnished insights from my experience and research to help you cut through the noise. Further, to do it justice this will be an article series.

This initial article will be a summary of points to consider, and my follow-ups will provide a deeper dive. In the next installment, I will cover the “Stays”, i.e. advantages, of TSP that support the possibility of staying. I will then follow up with “Goes”, i.e. reasons, to leave. Finally, I will give you the “planners perspective”. At STWS, we have over 80 combined years serving Feds so I will share those earned insights with you. Click HERE to read more.