TSP deposits

[jgrind1]

I've looked at the TSP website to find any reference to policies for depositing bi-weekly TSP contributions but haven't been successful.

We are paid by DOI.My paycheck is deposited on Thursday night.So i'm assuming that the TSP gets their money at the same time. The TSP deposits are more consistent and closer to pay paid then they used to be.

But i was wondering, is there a stated policy concerning when the TSP will deposit contribution monies into the our TSP accounts?

thanks

Joan

[tsptalk]

Welcome Joan! I'm not sure I've seen any policy on their site but you may want to look at one of your quarterly statements to check the dates and share price of your deposits.

Tom

[tsptalk]

One of the site's readers asked me this question via email. I told him I'd pass it along on the board. If anyone has any opinion, please chime in...

"When the money is deducted from my pay, and sent to tsp on the 1st of the month or sooner, does the market raise prices to make money?Do you think I should put my monthly deposits in the G fund, if price gouging is happening? Oh yea, if I buy any stock at one price, and then purchase more stock at a different price, how can I tell or do I get the last price I purchased the stock?"

[Rolo]

someone wrote to tsptalk:
Oh yea, if I buy any stock at one price, and then purchase more stock at a different price, how can I tell or do I get the last price I purchased the stock?"

Welcome, Joan!

When you trade a stock, normallythe price is at the current market price (plus or minus the spread--the difference between bid and ask prices, within 1/4 dollar of each other) at the time of the trade. There are few exceptions to that, such as Sharebuilder.com, which places stock trades every Tuesday, so your trade will be at the market price some time during that day. Check with your broker for details.

Prior trade prices have no bearing on future trade prices. The two trades will affect your cost basis, which is what you paid for all of your shares. For example:

You bought 100 shares of XYZ at $10/share and the trade cost $5.



(100 * $10) + $5 = $1005

Your cost basis is $1005/100, or $10.05/share.
The stock increases in value and you decide that it has momentum to climb further and buy 100 more shares at $12/share.



(100 * $12) + $5 = 1205,

plus what you already had

(100 * $10) + $5 = $1005

equals $2210 for 200 shares

Your cost basis is now$2210/200, or $11.05/share.
Later you decide the momentum has run out and sell at $16.50/share.



(200 * $16.50) - $5 = $3295 cash-in-hand

Subtract your cost basis from your sale price to measure profit:

$3295 - $2210 = $1085

Divide your profit by your cost basis to calculate your gain:

$1085 / $2210 = 49% gain
A 49% gain sounds spectacular, but a percentage is not much help without a duration to give it meaning. If it took ten years to make that 49%, then that is equivalent to 4.9% annualised, not all that great.

If it took only eight months to gain 49%, then you must also annualise it to give it meaning. You do this by finding the monthly rate, then multiplying it by twelve months. You can also divide the rate by the number of days you held the stock and multiply it by 365.



(49 / 8) * 12 = 73.5% annualised, which is spectacular

or

You could divide twelve by the duration and multiply the quotient by the gain:

(12/8) * 49 = 73.5%
...hope that helps.

[Oldman]

I too have had the same questions about when my deposits are credited to my account. I am a federal employee (DOD) and my pay period ends on the saturday prior to the following Thursday which is payday. We are already being paid four days after the end of our work weeks. For most of the year our deposits were posted on the monday following the end of the pay period.

All of a sudden they have been changed to around payday. Is this an effort to hold our money even longer? I have tried to find out when the fund must be posted but no one at the TSP seems to know this answer. It appears all of this comes from the different finance centers. I am amazed that you caught this because I thought I was the only one who noticed. If a bank did this with your money everyone would be up in arms about it!!

If I have earned my pay for two weeks ending on a saturday I want my deposit to hit the TSP on Monday. Not on the payday that DoD has decided will be sometime later.

Oldman