TSP Planning Report December 2020
- Unemployment lowered, but not by much. This month’s unemployment rate came in at 6.7%, compared to last month’s 6.9%.
- PMI (Purchasing Managers Index) continued to expand (any reading above a score of 50 means expansion). This month’s reading came in at 57.5, compared to last month’s 59.3.
- The S&P 500 (C Fund) increased 10.95% during the month of November. The YTD return is 13.93%
- The Fed Funds interest rate remains between 0% – 0.25%, and the Fed suggested that such rates will hold thru 2023.
- The 3rd Q3 GDP estimate shows GDP exploding 33.4%. This is on the heels of Q2 where GDP dropped -31.4%.
As we’ve seen for the past 6-7 months, Coronavirus is no longer impacting the economic outlook. If anything, just the opposite – investors are forecasting an accelerated return to normalcy now that a vaccine is upon us.
As of the end of November, the S&P 500 is up 13.93% YTD. Remember, the S&P 500 was down 33% at the end of March 2020. For it to be up 13.93% means that it traversed 46% over 7 months!!! For perspective, the G fund traversed less than 1% during the entire 2020.
For this to continue, we need business-friendly governance. This, of course, will depend on the incoming administration.
On a related note – I’m still waiting to see how government policy will affect real estate. Evictions and Foreclosures have been stalled. That means the real estate business may have a drag on their recovery. Thankfully, the TSP is not affected much by the real estate industry.
Anyone who has more than 5 year 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.
DON’T JUST LOOK AT RATE OF RETURN. Always view the target return of each portfolio in context of its ranges of fluctuation.