financial planner Stephen Zelcer

TSP Planning Report April 2022

April 2022 TSP Planning Report:


  • The G Fund rate for April 2022 was increased to 2.5% , from March’s 2%.
  • This month’s unemployment rate decreased from 3.8% to 3.6%.  
  • PMI (Purchasing Managers Index) continued to expand (any reading above a score of 50 means expansion). This month’s reading came in at 57.1, compared to last month’s 58.6.
  • The S&P 500 (C Fund) increased 3.72% in March, compared to -2.99% in February.  The S&P 500 is down -10.61% YTD.
  • The 1st estimate of Q1 GDP shows a negative -1.4% GDP.  Aside from the pandemic, this is the first negative GDP since 2009.  
  • The Fed Funds interest rate increased to 0.5% from last month’s 0.4%, and they anticipate more rate increases over the remainder of this year.   

This is ugly.  We are no longer being distracted by Covid, or Russia, or supply chain crisis.  We can now clearly see what’s happening.  The economy is struggling to move.  Everything is too expensive, and there’s too little supply of everything so it will only continue to become more expensive.  And now, with rising interest rates, people will not have access to money to buy these more expensive items.  This is known as “stagflation.”   
The one metric that may signal relief is low unemployment – at least people have jobs and income to afford their basics.  However, if inflation & interest rates continue to rise, employers may no longer be able to afford their employees.  If that happens, we may see a recession, or even a depression.  We need to keep an eye on employment rates over the next few months.  

Bottom Line:
The market has already dipped significantly, and I don’t know when investors will start looking past the immediate gloom & doom towards a brighter future.  The rebound, when it comes, usually comes quickly.  As such, it’s hard to advise to pull out of the market.  
If you are seeking 4% yields, you may be able to accomplish this in the near future without any stock exposure, because the G fund yield is rising quickly.  This, in turn, decreases the need for stocks in my lower-yielding portfolios.  
However, for higher yields you will still need stock exposure.    Keep investing, and go on with your business. In fact, you may want to introduce some more money into the C & S funds to capture the bounce-back.  Your new TSP contributions should go 70% C fund, 30% S fund to catch a bounce-back.  If your G fund is overfunded (if you don’t know what overfunded is, contact me asap), consider doing an inter-fund transfer from G into C & S to participate in the bounce-back. 

As I said last month, both G fund and F fund are poor options in this environment.  G fund is under-performing inflation (inflation is 7.9% while G fund is 2.5% and rising).  F fund is exposed to interest rate risk.  Inflation leads to a rise in interest rates which will crush the F fund.  
Of the two, the G fund is the lesser of the two evils, because the F fund will have a double-whammy: It’ll lose principle and the remaining principle will be deflated, meaning less valuable.   G fund can’t lose principle. 

See this month’s recommended portfolios.  DON’T JUST LOOK AT RATE OF RETURN. Always view the target return of each portfolio in context of its ranges of fluctuation.

Anyone who has more than 5 years before drawing income from their TSP should consider taking a more aggressive posture going forward and use my aggressive portfolio’s below.  If you are within 5 years of retirement, you should email me to get a more customized recommendation. 

If you have any questions, feel free to contact me.

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Click here to download my portfolios.

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