financial planner Stephen Zelcer

TSP Planning Report – January 2021

TSP report for January 2021

TSP Planning Report January 2021

Happy 2021!

Before we dive into the numbers, let me make a general introduction about investing:

  1. There are many TSP investors who invest based on feeling.  Emotional investing has probably cost TSP investors more than it has saved them.
  2. Some felt Trump was too risky, and they have been out of the market for the past 4 years, missing about a 60% portfolio increase.  Some feel Biden is too risky and are now moving out of the market.  Are you any of those?
  3. A sentiment I often hear is “I don’t trust the market.”  I respond with a question – “Do you feel that Amazon is about to go out of business?  How about Walmart?  How about Google?”  Etc.  The response to that question has always been “no.”  Well, if Amazon and friends are not going out of business, why do you feel the market is going to tank?  There might be some companies that come and go, but remember, the TSP only offers broad market investing, so you will have to have the entire economy suffer a lapse in order for you to lose.
  4. Even if the entire economy suffers a lapse, like it did with Coronavirus, investors need to ask themselves if this is permanent or temporary.  Amazon dropped in March, but why would Amazon go out of business when people are not able to shop in malls?  That is temporary.  And again, TSP investors are not investing in the stock of a single company but rather in the broad market.
  5. Possibly the greatest long-term broad-market threat is big-government.  Think of the I fund – and what happens in other countries where governments are not as business-friendly.  Or, instances where government props up a sector artificially, and then let’s go.  This is what investors need to keep their eye on and invest (and vote) accordingly.
  6. Emotional investing has probably cost TSP investors more than it has saved them.

Now, a 2nd general introduction about using my recommended portfolios:

  1. As always, these portfolios are not designed for people who are currently drawing from their TSP.  That is a completely different approach to investing.  If you are in that camp, send me an email to discuss.
  2. So, what are these portfolios designed to do?  They are designed for growth, and the intent is to give you the portfolios with the greatest likelihood of hitting the target return, with as little risk as possible.  That is why, for example, you will rarely see the I Fund in my recommendations.  The I Fund has a dismal track record, historically providing HALF the returns of the C Fund, with the same level of risk.  Let me say that again – same risk, HALF the growth.
  3. These portfolios are also reflecting the current state of the economy.  In some instances a 7% return will require very little risk-taking, and in other instances a 7% return will require significant risk.  DON’T JUST LOOK AT RATE OF RETURN.  Always view the target return of each portfolio in context of its ranges of fluctuation.

January 2021 TSP Planning Report:

  • This month’s unemployment rate remained at 6.7%.
  • PMI (Purchasing Managers Index) continued to expand (any reading above a score of 50 means expansion). This month’s reading came in at 57.2, compared to last month’s 57.5.
  • The S&P 500 (C Fund) increased 3.84% during the month of December.  The 2020 return was 18.31%
  • 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 of the end of 2020, the S&P 500 was up 18.31%.  Remember, the S&P 500 was down 33% at the end of March 2020.  For it to be up 18.31% means that it traversed 50% over 8 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 Biden administration.  I am watching this like a hawk.

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.

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 –

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