What are the risks of the G fund? (2024)

What are the risks of the G fund?

The G Fund is subject to the possibility that your investment will not grow enough to offset the reduction in purchasing power that results from inflation (inflation risk).

The G Fund, which is made up of government securities, grew at its statutorily mandated rate of 0.33%. The G Fund has increased 0.67% in the first two months of 2024. Get the latest pay and benefits news delivered to your inbox.

G Fund Returns

The G Fund has earned a compound annualized return of 4.2% since August 1990. Its year-to-date return is 0.94%, and its 1-year return is 4.30%. A $1,000 investment in 1990 would be worth $4,032 today.

Basic Info. Thrift Savings Plan G Fund Monthly Returns is at 0.33%, compared to 0.34% last month and 0.28% last year. This is lower than the long term average of 0.37%.

Even the G Fund (which invests in government securities) isn't protected by the FDIC. But under federal law, the payment of G Fund principal and interest is guaranteed by the U.S. government.

The G Fund is invested in U.S. Treasury securities specially issued to the TSP. Payment of principal and interest is guaranteed by the U.S. government. Thus, there is no “credit risk.”

While you are working, down markets are an incredibly powerful time to buy low so you can sell high later. If you go all in to the G Fund right now, that is doing the exact opposite: buying high and selling low. Over time, this strategy could be detrimental to how much money you'll have by retirement.

A protected account is an investment account that can grow but cannot lose money. The G Fund (the G stands for Government Securities) is the only account in the TSP that is a protected account. It's a popular choice since your money is safe from market downturns.

The G-fund can be an incredible tool but is rarely the best option for your entire portfolio. Because everyone's situation is different, the best portfolio is invested in the mix of funds that matches your stage of life and financial situation, but almost always should include some stocks.

The TSP offers these risk ratings but offers no context. Take, for instance, the G fund. While certainly a low volatility investment, it is ranked 1/5 on the risk table because of its principal protection features. Many people call this fund the safest TSP fund.

Is the G fund a bond?

Summary: The TSP G Fund (Government Securities Investment Fund) is a low volatility, virtually risk-free U.S. bond fund. The TSP G Fund allows investors to earn interest rates similar to those of long-term U.S. Treasury Bonds, but without any risk of loss of principal.

THE G FUND:

They give returns roughly equal to 10-year treasuries, but have liquidity and protection against interest rate fluctuations even better than 3-month T-bills. This gives the G Fund the best overall risk/reward ratio of any Treasury investment, and it's only available to TSP investors.

Government Securities Investment Fund (G Fund)

The G Fund invests in a special non-marketable treasury security issued specifically for the TSP by the U.S. government. This fund is the only one in the TSP that guarantees the return of the investor's principal.

The G Fund invests in “a nonmarketable short-term U.S. Treasury security that is specially issued to the TSP.” That makes it sound like a Treasury bill, which is listed as a cash equivalent above, but remember that the G Fund offers you a free lunch.

While the G Fund does not guarantee inflation protection, it is highly likely to provide it, and then some. TIPS guarantee your principal against inflation and pay a fixed rate of interest on that principal every six months until maturity.

The conservative funds are the G and F funds and the aggressive funds are the C, S, and I funds.

How Does Dave Ramsey Recommend Federal Employees Allocate Their TSP Investments? Dave Ramsey recommends avoiding the Lifecycle Funds completely and sticking with the 3 core TSP stock funds for investing over a long federal career because they provide the most growth potential.

For TSP participants who are still working for the federal government or members of the uniformed services, an in-service withdrawal can have a serious impact on your ability to accumulate enough savings to support your future goals.

As of year-end 2023 just under 117,000 TSP investors had $1 million or more in their accounts, an increase of some 40,000 during the year, another impact of the rebound in stock-based investment funds during the year making up for their losses of 2022.

How often does the G fund pay interest?

The G Fund rate is set once a month by the U.S. Treasury based on a statutorily prescribed formula (described below), and all G Fund investments earn that interest rate for the month.

If you want your TSP balance to be able to generate an inflation-indexed annual income of $10,000, most financial planners will suggest that you have a $250,000 balance at the time you retire. If you extrapolate this number, you can see that if you want to get $40,00 a year, you're shooting for a $1,000,000 balance.

You may have heard of age-based asset allocation guidelines like the Rule of 100 and Rule of 110. The Rule of 100 determines the percentage of stocks you should hold by subtracting your age from 100. If you are 60, for example, the Rule of 100 advises holding 40% of your portfolio in stocks.

The small- and mid-size businesses of the Thrift Savings Plan's S Fund had the best performance in December, growing by 10.45%. Over the course of 2023, the S Fund increased 25.30%. The common stocks of the C Fund finished December 4.54% in the black, while boasting gains of 26.25% for the year.