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Welcome to TheTSPAnalyzer Points of Interest

Making Sense of your Thrift Savings Plan
Points of Interest
The TSP Analyzer presents many pieces of information that are both valuable and unique. Here we'll delve into these to discuss the things this application will tell you about your TSP account that you can't find elsewhere. I'll attempt to explain some of the strange things you may find that don't look quite right (but are). I'll use the Sample Data in all examples. The Sample Data is from a real TSP participant and the data presented by the application has been verified as accurate. This page is under construction and probably always we be. Read on! We don't want to hold off providing you valuable information.

  • Why you should take a more active role in your TSP.
  • What does this application show that you can't find elsewhere?
  • What is the Total APR?
  • What can you do with the Total APR information?
  • Why is the Total APR so low?
  • APR - Why bigger isn't always better!
  • Why is my Loan Overpayment Refund less than my Loan Overpayment?
  • Why are the APR's earned not identical for Agency contributions?
  • What does the APR's mean when it is not for an entire year?

  • Why you should take a more active role in your TSP

    Whether you use this tool or not you should take a much more active role in your retirement than most federal employees currently are, especially if you are young. Here's perhaps a little incentive... Mr. Public is 50 years old and retires in 2019. He currently has just over $125k in his account and contributes 12% of his pay. This comes out to $678 a pay day with government matching. If we use the projection tab and set it to 5% he will retire with almost $453k. If we change it to 7% it goes up to just over $521k. A difference of $68k. Now, let's take a friend of mine and run his numbers..... My friend is 33 and will retire in 2036. He currently has just over $79k in his account and contributes 5% of his pay. This comes out to $345 a pay day with government matching. If we use the projection tab and set it to 5% he will retire with just over $1M (1,008,000). If we change it to 7% it goes up to almost $1.5M (1,466,000). A difference of $458k. This is a huge difference. Starting with almost half as much and contributing 5% to Mr. Publics 12% he outperforms him by miles. A 2% difference in his return nets him $458k more compared to $68k. Time is money, start paying attention to your money. Especially if you are young because you have time!!!


    What does this application show that you can't find elsewhere?

    I'm just going to hit the big ones here -Total APR for the entire investment period (entire time you have been in the program) -Annual statement information for the years prior to 2007 at which point the TSP started providing them. -APR's for your investments as well as the Agency's contributions (important if you took loans) -Total Contributions, loans dispursed, loan payments made, gains and loses, and total change in account value. -Daily account value for every day the market is open. This is important for answering questions like; Am I still positive or am I losing my contributions!!! -What exactly would my account be worth at any given time if I invested differently. (investment strategies). -Based on how my investments are performing and what I'm contributing what will I have when I retire?


    What is the Total APR?

    The Total APR is a unique piece of information presented by the application that you don't get on your quarterly or annual statements. This is the APR you have earned over the life of the investment. It can be seen on the Overview tab in the bottom of the Totals Section. Mr. Public has a Total APR of 6.64%. Suppose Mr. Public went to a bank and set up a savings account that gave him a 6.64% return on his investment. Then, over the years, he deposited the amounts just as he has with his TSP contributions-this being the exact same amounts on the exact same dates- and took money out just as he had with his loans-this being the exact same amounts on the exact same dates-Mr. Public would a saving account that contained exactly what his TSP account is worth. This is the rate of return you have earned over the entire investment rather than just by each year or quarter.


    What can you do with the Total APR information?

    Many people feel the best way to plan your retirement is to take your current cost of living, subtract the bills you won't have (house payment, maybe), add in the costs you will have (medical definitely), then factor in an inflation rate. This tells you how much you will need for retirement each year. Next, subtract out any additional incomes you may have (Social Security, federal retirement, military retirement....) and your left with the income your retirement account must generate. Based on that and the rate of return you hope to realize you can ballpark how large your retirement account needs to be. The next step is to create a simple ammoritization table to see if you are getting there. Many ammoritization calculators are available on the web. You can use the Total APR and see if you are on track or just click the Projection Tab. The program has done the ammoritization for you! Maybe you're ahead of the plan and can move to less risky investments or perhaps you need to manage your account a bit closer and try to realize better returns. There can be a lot more variables in the equation depending on how exact you want the formula but key variables in any equation is what your investment needs to be making and what it is making (Total APR).


    Why is the Total APR so low?

    This is one of those that looks wrong at first glance. How does Mr. Public have a overall APR of 6.64% when 5 of the 7 years are above that and several are well over twice that? The simple answer is timing is everything. Notice in 2003 he had almost $30k in his account and it went up by 30%. Using rounded numbers that would mean his account would go up by one third, or $10k. However, we have to remember they started this new method in June of 2003 so this is really just over half a year so his 30% return made him just over $5k. Now lets look at 2008. He lost 12.57% which is less than half of the 30% he gained in 2003. But, he had over $72k in at the start of the year, contributed $13.5k that year, and paid back over $11k in loans. This means he lost roughly 12.5% of $95k or $10.5k. So, losing 12.5% lost him nearly twice as much money as making 30% gained him. A simpler explanation can be seen in this example; a 30% gain of $10k is $3k but a 30% lose of $100k is $30k. That's a big difference even though the gain/loss percentage is the same. The bottom line is he made good returns when he didn't have a lot of money invested. Over time he contributed quite a bit then had a very bad year when he had a lot more money invested. This brought his overall APR down significantly because the overall APR (Total APR) is what you would need to have earned on every contribution amount to realize the final amount you currently have.


    APR - Why bigger isn't always better!

    Here's one that will blow your mind, well, at least it did mine. Is a higher APR always better? My first thought was 'of course it is!' but then I noticed something in the numbers that didn't make sense. Check out Mr. Publics 2004 data. On the Overview tab we can see his investments made 18.52% while the Agency matching made over 7% less. It appears he obviously did something very right but this seemed odd as 2004 was a pretty good year overall. How did he outperform the 'regular market' by 7% in a decent year?....so I dove in and here's what I discovered; Early in 2004 he took a $17.5k loan. He then started making payments each payday until later in the year when he paid it all back. This can be a little confusing to see because he had two loans going at the same time but I know this is what he did (we're close ). This still didn't make sense though so I looked at the contributions tabs to see if perhaps he'd been lucky enough to buy shares back every payday (loan repayments) at a price lower than he sold at when he took the loan. Turns out most purchases where at a higher market price. This really didn't make sense at it indicated his return should have been lower than the money he left in, not higher! He clearly lost investment income by having this money out of the market. So, I broke out Excel and created a pretty exhaustive spreadsheet with lots of formulas to try and see what happened. Yes, Mr. Public would have had more money if he'd left his money in, his APR would have been lower but his investment value would have been higher. Here's why; stick with me, I still have a difficult time comprehending this myself sometimes. From the time he took the loan (Jan 7, 2004) to the time he paid it all back (Oct 29, 2004) the market pretty much bumped along. Over this time it was up and down but realized an overall gain of 20 cents per share between those two dates. Then in the last two months of the year it gained 91 cents per share. So, he took out almost half his money and that money didn't make the 20 cents the rest did over the first 10 months. But, then he paid it back and made 91 cents a share in two months! APR is based on time so is skews the number significantly! It makes it look like his loan repayment money outperformed what he left in even though he lost 20 cents a share of income on what he took out. Here's a simpler way to comprehend this. Suppose you and I each have 10K. You invest yours on January 1rst and you buy your shares at $10 a piece so you have 1000 shares. At the end of the year the share value is $11 per share so your total value is $11k. I buy in on November 1rst. Turns out the market has been going up and down and I happen to buy in at $10 a share also so I also have 1000 shares. Of course, at the end of the year my share values are also $11 per share so we started with the exact same amount and have the exact same amount at the end of the year. However, because APR is dependant on the total amount of time my APR is much higher than yours. Your $10k made $1k in 12 months where mine made $1k in 2 months. I could have actually bought in at higher than $10 per share, made less money than you, but still had a higher APR. This is effectively what Mr. Public did with his loan!


    Why is my Loan Overpayment Refund less than my Loan Overpayment?

    Once your Loan Overpayment Refund is below a certain amount ($10 I believe) they just put the remaining balance into the G Fund. If you notice these two amounts are not the same look at your participant statements. You can do this by double clicking on any line in the Contributions tab window. You will notice a deposit into the G fund. I assume this is to keep them from having to do the extensive math to track the interest you owe down to the penny for the day.


    Why are the APR's earned not identical for Agency contributions?

    This also relates to the APR of your contributions if you have not taken loans or done anything different with your monies than what was done with Agency matching contributions. The short answer is all APR's are within 4 one hundredths of being spot on and this 'error' is caused by rounding. The long answer is there are a couple of ways to calculate APR. The most accurate is very very time consuming even with fast computers and would cause the application to pause for extensive periods while massive number crunching occured. The process we used not only gets you withing 4 one hundreds of a percent but it becomes even more accurate as the amounts it is working with increase. You will notice the variance get less as time goes by and more money is in the investments. We calculate to the second decimal place and with larger amounts a .01% change makes a more significant difference so the numbers become increasingly accurate as the amounts increase.


    What does the APR mean when it is not for an entire year?

    APR is always calculated for an entire year. This is important when looking at partial years. As an example let's say you received your 2010 Quarter 1 return and it showed you made 5% APR. This means that if you continue to earn at the rate you have in the first quarter your APR at the end of the year will be 5%. It does not mean that you can add the APR's and assume you will earn a return of 20% for the year (5% x 4 quarters).