TSP Planning Report December 2020

tsp report guidance

TSP Planning Report December 2020

Facts:

    • 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%.

Assessment:
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.

If you have any questions, feel free to contact me.
Email me here – stephen@stephenzelcer..com
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