TSP have compound interest? Unbelievable example <chart> inside!

**Hybrid93Hatch** · 02-12-2006, 11:43 AM

Suntrust sent me an interesting flyer. I'm new to the technical part of investing even though I've been dumping $$$ into TSP for over 3 years. Are we getting compound interest with TSP?

The returns are almost unbelievable:

**tsptalk** · 02-12-2006, 05:06 PM

Hello Hybrid -

TSP is part of the miracle of compound interest.

Albert Einstein suggested that compound interest was one of the most powerful forces in the universe.

Tom

**Hybrid93Hatch** · 09-08-2011, 06:28 AM

Sorry to bump such an old thread. Here we are over 5 years later and I am still uneducated about how compound interest ties in to the account.

When you look at a TSP account balance I see number of shares owned, share price, and total balance. How does one know how much (dollar amount) of the balance is from compound interest? I see the balance is up and down from day to day and the PIP percentage for the past 12 months. Does the PIP include contributions or just the percentage the account has earned?

Thanks for any info on this!

**KevinD** · 09-08-2011, 10:42 AM

Your SunTrust letter "assumes 8% return." Good luck with that...

http://en.wikipedia.org/wiki/Compound_interest

Personal Investment Performance (PIP) — The rate of return earned by your entire account during the 12-month period ending on the date indicated on your annual statement or on your Account Balance page of the TSP website. The PIP is a time-weighted return that has been calculated using a modified-Deitz method (a method used by many financial institutions and an industry standard). The PIP adjusts for the distorting effects of cash flows into or out of your account. It is an estimate; therefore, your PIP may not be the same as the 12-month performance of the TSP funds, which are time-weighted returns.

https://www.tsp.gov/sitehelp/glossar...yOfTerms.shtml