Inflation’s affect on the TSP

[md2018]

It’s been such a long time since inflation has been an issue, does anyone know how it will affect the different TSP’s funds?

[bamablue]

I suppose the answer to your question is, "it depends". The Fed seems to feel that this is an inflationary cycle that will not cause a trigger for rate increases. The Fed looks for a sustained 2% inflation rate and has stated that they don't see any rate increases until 2023. I don't think many investors are taking that as gospel. If the current inflationary signals continue (currently we are a little north of 4%), there will likely be a negative reaction by markets.

[Tomanyiron]

G fund daily returns (7 days a week) should increase.

[bloobs]

G fund daily returns (7 days a week) should increase.

Yup. I remember a time earlier this century when my local bank's checking account was returning 7% APR. If hyperinflation happens in a decade or so, it could be as high as 15-20% like between 1979-82.

[bamablue]

G fund daily returns (7 days a week) should increase.

Yup. I remember a time earlier this century when my local bank's checking account was returning 7% APR. If hyperinflation happens in a decade or so, it could be as high as 15-20% like between 1979-82.

I remember getting my first car loan in 1982 that I though was a steal at 14%. My savings account was getting 10% interest. You could easily get double-digit Certificates of Deposit (CDs)... Inflation is a time when you want to have a stash of cash...

[md2018]

Well I’m retired, no home or auto loans. A safe return of 4-5% in the G fund could actually be comforting. However what will groceries and utilities cost?

What about the F fund during higher inflationary periods?