G Fund: This fund invests in short-term U.S. Treasury securities that are specially issued to the TSP and is the safest investment choice in the plan. There is no risk of losing principal; however, the fund offers a means of earning interest that can keep up with inflation.
The G fund is popular because it never has a bad day. During the Great Recession of 2008-2009 hundreds of thousands of TSP investors moved out of the stock funds — which were plummeting — into the G fund. While its returns are low, it's never had a losing day. And those exclusively in the G fund stand to lose the most.
The TSP is possibly the most inefficient account to use for a down payment and to pay for college. Savings in an individual account or a Roth IRA would be much better for the down payment as well as paying for college. A 529 plan would also work well to pay for college.
The C Fund had the highest annual return for any of the TSP funds in 2019. The S Fund finished with a yearly return of 27.97%. This fund had the second-highest year rate of return among the TSP funds.
An interfund transfer (IFT) allows you to change the way money ALREADY in your account is invested. You are allowed two IFTs in a calendar month.
6 Keys to Maximizing Your Thrift Savings Plan Account
- Weigh Your Options. Depending on your income, assets, and situation in life the Thrift Savings Plan may not be the appropriate vehicle to save for retirement.
- Contribute as Much as Possible.
- Consider the Roth Option.
- Don't Withdraw Early.
- Invest According to Your Situation.
- Monitor Your Investments.
TSP investors are conservative in selecting funds for their investments. While stock funds have the best overall returns, the G fund is the most popular fund as of March 31, 2019. The C fund is in second place with a participant allocation percentage of 38.5%.
The average Thrift Savings Plan balance for Federal Employees Retirement System participants — 3.3 million people — was $138,933 in January. That compares to an average TSP account balance of $146,642 for the 314,193 Civil Service Retirement System participants.
Depending on when you begin retirement, you can simply leave the money in the TSP let it continue to grow. If you do not need to access it yet, it might be wise to let it be. Similar to other retirement accounts, you will need to begin minimum withdrawals at age 72. This is called a Required Minimum Distribution (RMD).
The TSP L 2040 Fund is one of the TSP Lifecycle Funds, designed for investors who plan to withdraw their money beginning 2038 through 2042. It aims to achieve a high level of growth with a low emphasis on preservation of investment capital.
Small Cap Index Investment Fund, or S Fund, follows the performance of Dow Jones U.S. Completion Total Stock Market Index. As of December 2018, the S Fund provided the 10% returns amounting to an amazing 13.67%, even better than the C Fund.
The Common Stock Index Investment (C) FundThe C Fund is invested in a stock index fund that tracks the Standard & Poor's 500 (S&P 500) Index. This is a broad market index made up of the stocks of 500 large to medium-sized U.S. companies. It offers you the potential to earn high investment returns over the long term.
Interfund transfers can be initiated on the TSP website. First, you must access your TSP account and then you must choose “Interfund Transfers”, which is listed under “Online Transactions” on the left side of the page. You will now find yourself on a page that shows your current fund allocations.
The TSP C Fund is a U.S. stock index fund invested in common stocks of the 500 companies in the Standard & Poor's 500 (S&P 500) Index. Many of the stocks in the index are household names, such as General Electric, Coca Cola, Exxon Mobil, and Walt Disney.
How Much Should You Invest in a TSP Account? I recommend investing 15% of your income for retirement. When you contribute 15% consistently, you set yourself up to have options when you retire.
A lifecycle fund is an all-in-one investment option that offers you, in a single fund, a diversified portfolio with an asset allocation geared to the year in which you expect to retire. Most lifecycle funds invest in other mutual funds, which is known as a “fund of funds” strategy.
The TSP L 2020 Fund was one of the TSP Lifecycle Funds, designed for investors who planned to withdraw their money beginning 2020. The fund was retired in June 2020, and its assets transferred into the TSP L Income Fund.
Summary: The TSP L 2030 Fund is a “fund of funds” invested in the TSP G, F, C, S, and I Funds. It aims to achieve a moderate to high level of growth with a low emphasis on preservation of investment capital.
