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Retirement Planning


Whether you are close to federal employee retirement or just starting out in your career, this is the place to share ideas with your federal colleagues on creating a secure financial foundation.


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boggeymann  
#1 Posted : Wednesday, December 13, 2006 8:09:11 AM(UTC)
boggeymann

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simple question but anyone know if we get dividends on the C fund at the ending of the year like one would normally get from a Mutual Funds. In 10 years I have yet to see any dividends if that is not the case one would be better off supplementing a IRA Roth that does pay out dividends.

currently I put 17 percent in the tsp but if they are not paying out dividends I maybe better off putting my funds into a Roth anyone got some incite into this
edalder  
#2 Posted : Wednesday, December 13, 2006 8:31:45 AM(UTC)
edalder

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I would imagine the dividends are simply reinvested and go into the computation of the rate of return for the particular funds at issue. The C fund invests in stocks that comprise the S & P 500 and many of those companies do issue dividends.

For example, most of the return in any bond fund consists of dividends. The same would be true of the G fund.

Guess I am not sure what your question is?
Kivi
saraho  
#3 Posted : Wednesday, December 13, 2006 9:16:29 AM(UTC)
saraho

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Disappearing Dividends

By Karen Rutzick
krutzick@govexec.com

Let's solve a mystery about the Thrift Savings Plan: What happens to the dividends earned from stocks in the TSP funds?

Dividends are a share of company earnings paid out to investors. They are declared by a company's board of directors and are often paid quarterly.

The reason TSP participants never see dividends on their statements even though some of the funds earn them, is they are automatically reinvested into holdings. So the fund's value increases, but the dividends' contribution is hidden.

The TSP is the federal employee version of a 401(k) retirement savings plan. Not all the funds are composed of publicly traded stocks. In fact, the five stand-alone funds in the plan get their earnings from a blend of sources.

Only the common stocks (C) fund, the small- and mid-sized companies (S) fund, and the international stocks (I) fund make part of their earnings from dividends. The rest of the earnings for the C and S funds are derived from fluctuations in the market value of the stocks making them up. I Fund earnings stem from both these factors and from changes in value of American currency relative to foreign currency.

The government securities (G) fund's earnings are derived solely from interest, paid by the U.S. government. The fixed-income (F) fund's earnings come from changes in market prices as well as interest. Neither of those funds have any dividends.

The earnings of the F, C, S and I funds are reduced by administrative costs (which are the lowest anywhere, by a wide margin) and management costs from Barclays Global Investors, which runs the investments. Share prices are calculated after deducting these costs.

Automatic reinvestment of dividends in the TSP means federal employees, perhaps unknowingly, are investing more in their retirement.

Did you ever notice that returns on the C Fund are sometimes higher than the returns on the Standard & Poor's (S&P) 500 Index, which the C Fund tracks? That's because the S&P 500 does not include reinvestment of dividends, and the TSP does.

Don't confuse the TSP's system of reinvesting dividends with DRIPs (dividend reinvestment plans). DRIPs are programs where an individual company automatically reinvests dividend earnings for stockholders by providing additional shares of stocks, often with no extra charge.

Thirty years ago, retirees often lived off of dividends alone, keeping their principal intact, according to certified financial planner Karen Schaeffer. Longer retirements make that practice rare today. TSP participants should worry much more about the funds in which they invest, than they should about how those funds make their earnings, Schaeffer said.

"Generally, what we're trying to get people to focus on when we're looking at their investment is not so much the difference between dividends, capital gains and interest, but the difference between what they invest in and what is worth--total return," Schaeffer said. "It's the total return that gives us the confidence that we're keeping pace with, or maybe even staying ahead of, inflation."

This document is located at http://www.govexec.com/dailyfed/1205/122205pb.htm

A TSP question? A questionable TSP strategy?,
visit the TSP Strategy Group at
http://finance.groups.yahoo.com/group/TSP_Strategy
Dogcliff  
#4 Posted : Wednesday, December 13, 2006 9:21:31 AM(UTC)
Dogcliff

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Or, as stated on the TSP.gov site;
quote:
What do the earnings on the TSP investment funds consist of? G Fund earnings consist of interest paid by the U.S. Government on the G Fund securities. The earnings of the F, C, S, and I Funds have four sources:

Changes in the market prices of the securities held in the Barclays' index funds, net of trading costs charged to the index funds. (In the case of the I Fund, market price changes include the effect of changes in the value of the U.S. dollar in relation to foreign currencies.);Interest or dividend income earned by the securities held in the Barclays funds;Securities lending income generated by Barclays' short-term lending of securities held in the index fund to a select group of brokers


TSP Civilian Features

dc
friend2u  
#5 Posted : Friday, December 15, 2006 8:15:59 AM(UTC)
friend2u

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With so many funds tracking the S&P including our C Fund I would think that somewhere there is a compilation of dividends paid out against common stocks held by the S&P. I will try and research this a little but cannot spend too much time on it!
friend2u  
#6 Posted : Friday, December 15, 2006 8:29:13 AM(UTC)
friend2u

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This is an article on the subject of S&P dividends from Kiplingers and although it was published last August it really enlightens one on S&P dividend payout now and in years past. From what it sounds like the dividend payouts in years past over shadow payouts today.

Also remember that we have a deficit that is making our dollar weak, we are strapped with high
oil related costs and we have a war on our hands that may not go away in hurry! Roth's are tempting but the traditional IRA gives you immediate tax benefits (depending of course on your AGI).
friend2u  
#7 Posted : Friday, December 15, 2006 8:29:58 AM(UTC)
friend2u

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Oh..and here is the article........

http://www.dividendgrowth.org/blog/?m=200608
gh1  
#8 Posted : Tuesday, December 19, 2006 10:49:29 AM(UTC)
gh1

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Joined: 11/2/2009(UTC)
Posts: 165

TSP is a tax-advantaged investment vehicle -- like an IRA -- and neither of these are intended to be providing cash payouts (like dividends) before retirement. What TSP does with dividends is exactly what happens with my regular IRAs, and I like it that way. Dividend reinvestment increases returns. This is not a result of mismanagement...it's intentional. Can you get a better overall return elsewhere (particularly if there is no Federal match)? If you can, then by all means invest elsewhere.
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