Welcome to TSP Strategies

Welcome to TSPstrategies.com! This Web site is dedicated to exploring the benefits of saving and investing in the Thrift Savings Plan.

The companion book, TSP Investing Strategies: Building Wealth While Working for Uncle Sam, lays out a simple set of strategies for long-term, buy-and-hold investors to consider while investing in the TSP. This Web site and accompanying blog will build on those concepts, while focusing on new investing options and developments related to the TSP.

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Jan


04

C Fund Outperforms Basket of Hedge Funds Over Long Term

As noted in TSP Investing Strategies, ten years ago Warren Buffett made a bet that a low-cost index fund resembling the S&P 500 would outperform any basket of hedge funds that might be chosen to compete against it.

As you know, the TSP’s C Fund closely matches the S&P 500 index.

Ten turbulent years later, the results are in: the S&P 500 (C Fund) won! The S&P 500 index fund returned 7.7% annualized over that time, compared to the miniscule 2.2% average return of a basket of hedge funds picked by an asset manager.

And this was just as a collapse in world markets was just getting started.

Ultimately, this means that if you too had invested in the C Fund, you would have outperformed the same basket of hedge funds, which also charge significantly more in management fees than the current 0.04% or so charged in the TSP.

Why pay more to get less in returns?

It is also another indication that it pays to invest passively in a portfolio of index funds over the long term, despite the ups and downs of the market.

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