do you understand this? Have you ever seen that on the internet? Like, do you
understand this? A lot of people say that, like Bitcoin, right? Like, Bitcoin
solves world hunger, do you understand this? Which is cool, like I get that meme
or maybe I don't, but I see it all the time, but you know actually there's a lot
of stuff that people don't understand that they should, like the TSP, or a
terrorist savings plan. So I've actually heard a lot of people say weird stuff
about the C-Fund and the TSP, which should be like a big portion of a lot of
people's TSPs in general, and so I thought maybe it'd be good to go through
this, like, do you understand this meme with the C-Fund. So let's just jump in
and like go through what the C-Fund is and what it isn't, but before we do that
I just want to say, so we're all clear, like I'm not a financial advisor, and
even if I was, I'm not your financial advisor, so please don't take a YouTube
video for financial advice, even like anybody's YouTube video for financial advice. This is just some general information, and I'm not affiliated with
the US government, and nor am I affiliated with the terrorist savings plan, so take it all
with a grain of salt. So let's start off at the beginning. What is the TSP? The TSP
is the terrorist savings plan. It's a defined contribution plan, which means
that you put a specific amount of money in each pay period, and the government
will match your TSP contributions up to the first 5% for civilian federal
employees who are eligible to participate in the TSP fund. So you put
in 5% of your salary, the government matches 5%. And in a lot of ways it's
like a 401k, but there's some special weird things about it, because it's the
TSP, so it's only open to federal employees, military members, people of our
federal government, and actually there's no mutual funds in the TSP. They're not
securities that are traded on any stock exchange, instead there's trust funds
set up by the comptroller of the currency. So that's why we have these five weird funds
plus life cycle funds, and the C fund is one of these funds. There's no ticker
symbol, you have to go to the TSP website to check it out, because like I said, they're not
traded, they're not regulated by the Securities and Exchanges Commission, they're just these trust funds. So what is the C fund? The C fund is a fund, one of
these trust funds, that invests in stocks so that it is like equally weighted to the S&P 500
index. So the S&P 500, you'll hear all the time, they say it on the news, like what
happened to the S&P 500 today? And it is the 500 largest companies that are traded on
the stock market. So let's see what's in the S&P 500. So I'm on the TSP website right now
and looking at what they say about the C fund. And if you scroll down, they'll say that they
want to meet the S&P 500 index. And they show their rates of return, so was like doing really
well in 2021, and over the past 10 years is compounded at 16% per year, which is amazing
That's higher than a lot of other 10 year periods, but we'll get into that in a little bit
And if you look at what the top 10 holdings are in the S&P 500, it's actually a lot of tech
companies because tech companies have the largest market cap right now in the stock market. So it's
Apple, Microsoft, Amazon, Facebook, Tesla are the top five biggest holdings, followed by Google
So let's take a look at how the C fund has done over the past 10 years. It's done amazing. So
if you had $100 in your TSP at the start of October, 2011, in October of 2021, you'd have $450
in your TSP without even doing anything. So in 10 years, it increased by 450%
Now, this is where we get into this, like, you understand this type question, because I had a
lot of coworkers who were telling me that like, the G fund is where it's at because it's guaranteed
to go up. And I'm like, yep, it is guaranteed to go up. But I don't necessarily share your world
view about investing. So over that same 10 year time when your $100 could have turned into $450
if you had invested only in the G fund, you'd have about $120 now. So it didn't go down
But inflation is this yellow thing I put on the graph. That's like $125, $122. So your $100
that you had is worth less. And if we look at even just the past year, it looks even more extreme
because we had 6% inflation in 21. And the G fund didn't really return anything. And the C fund went
up by like 40% in one year, which is amazing performance. So but is this like real? Can we
expect to have these types of returns forever? No, of course not. So let's go back to this like
is the C fund gambling type question? So this is a tool I love using. It's called C Firesim
It's at cfiresim.com. And it looks at how your portfolio would do in retirement. So you can say
like, I'm going to retire this year, and I'm going to be retired for 30 years before I expire. And I
have a million dollars, and I'm going to spend $40,000 a year. And then you click like, oh
yeah, I got 75% stocks, 25% bonds, you click this run simulation button. And it tells you whether or
not you're going to run out of money. So with this baseline case, you know, 95% of the time
your million dollars lasts longer than you do. And sometimes you die with like $2 million. On
average, you die with about $1.6 million. So that's how the tool works. So I'm just going to use it
to look at stock market returns. Well, timeout, let's go back. So this is using like over 150
years of data from the 1870s to the present. So you can see there's times here where the stock
market's doing really bad, like the 1929 crash. That's like one of these times when you've run
out of money. And the other time when the stock market's really doing tough is in the stagflation
of the 70s. You see those are simulations. If we repeat that kind of trajectory, that's a period
where your portfolio might not last. But I just want to use it to look at how the C Fund does over
time. So let's say we're starting with $100 and we're not going to take any money out. We're just
looking at how the stock market's doing. We're going to look at a 30-year time horizon with 100
stock. All right. So we look at the simulation and it failed zero times, never went to zero. At the
end of 30 years, the lowest return you'd ever have is $215. So over 30 years with all the stock
market data that's ever happened, even if you invested in 1929 at the start of the Great Depression
or before the dot-com bubble or at the start of the stagflation of the 70s, over 30 years, it's always
a positive return. That was our simulation for 30 years. Let's take a look at 20 years, the less time
it's going to have to recover after these big things. And even if you're looking at a 20-year
window, the historical returns on stocks, say the C Fund, they're always positive. And the lowest you'd
end up with here is $120 starting with $100. All right. And there are some 10-year windows
We're going to shrink this down to 10 years. And you can see sometimes you end up with less money
after 10 years than when you started. So the lowest return over a period of 10 years here is $68
But the point is that in these shorter time horizons, sometimes you do lose money in the C Fund
So that's something to consider. But like I showed with the G Fund, the G Fund is barely keeping up
with inflation. And you've got to weigh whether or not your safe return is worth it in retirement
and kind of coming up with what makes sense for you. So that was kind of a lot of data. But I just
wanted to show you what historical returns have been for stocks. We don't know what the future is
going to be. We don't know what's going to happen if you put your money in tomorrow. You could hit
one of these catastrophic events, like January 1, 2022, when the stock market has its biggest crash
of all time. But we can look at the historical data. And over time, with long enough time
the stock market recovers. And even though C-Fighter Sim simulations weren't necessarily
the worst case scenario, if you're still a federal employee and planning to continue for a while
if there's a big stock market crash, you'd still be putting money in each paycheck with your TSP
And that would have some time to grow. It's only once you reach the retirement stage that
these type simulations become super-duper critical in terms of, well, am I ever going to get back to
the amount of money I have on day X? And hopefully by that time, you have some balanced portfolio
with the T-Fund, which we said has its pros and cons. It's never going to go down, but also might
not keep up with inflation. And some other stuff, too. And there's always the life-cycle funds where
the TSP kind of selects the stuff for you if you don't feel comfortable doing it. And the only other
thing I see that people get wrong all the time is they're concerned about how many shares of the
C-Fund they have. It doesn't really matter. The more money you have in the C-Fund, the more it's
going to go up. And if you buy it, the share price isn't there. It's just how much money you have in
there. And then the returns are based on how much it went up. It doesn't really matter if you have
like 100 shares of the C-Fund or 200 shares. I see this all the time on Facebook groups and other
stuff. It doesn't matter how many shares you have. It has how much money you have in the account
And if you leave it alone, how long is it going to grow and you get these stock market returns
So hopefully next time somebody starts talking to you about their crazy TSP strategy
you'll at least have some facts and some historical data so you can think about whether
or not what they're saying makes any sense at all. Yeah, so I hope that helps. I hope you have
a solid understanding of what the stock market's doing. As always, like, subscribe, turn on post
notifications, join my Facebook group, join my email list, do all that stuff. It really helps
Especially on YouTube, it helps the algorithms. If you can like, subscribe, turn on post notifications. I appreciate you guys and thanks so much for watching my video