What is the safest TSP fund?
The G Fund is often considered the safest option among TSP funds.
Consider investing in the G Fund if you would like to have all or a portion of your TSP account completely protected from loss.
The common stocks of the C Fund continued its strong recent showing, increasing 5.34% last month. The C Fund has grown 7.49% in 2024, marking the best performance among the TSP's core funds.
However, the L Income Fund is the most conservative of the L Funds. It focuses on money preservation while providing a small exposure to the riskier funds (C, S, and I Funds) in order to reduce inflation's effect on your purchasing power.
The most aggressive Lifecycle Funds (L Funds) were up 14.6% (the L 2055, 2060, and 2065 Funds) so far this year. All TSP Funds are up in 2023. Over the past 12 months, only one TSP Fund has had a negative return. That is the F Fund which is down 0.87% over 12 months.
First of all, you have to contribute as much as you can afford and at a minimum, the 5% employee contribution where you get the 5% match from the government. And the other side of the sword is to invest as aggressively as you can tolerate.
It may surprise some of you to learn that none of the money in your TSP account is insured by the Federal Deposit Insurance Corporation, like your bank deposits are. When you invest for retirement, you take on varying levels of risk, depending on how you allocate your investments.
Thrift Savings Plan F Fund Monthly Returns is at -1.41%, compared to -0.19% last month and -2.58% last year. This is lower than the long term average of 0.44%.
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%.
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.
How does Dave Ramsey invest in TSP?
Once you invest 5% in a TSP, Ramsey advises you to switch to a Roth IRA. His reason here is simple: A Roth IRA has more investment choices than a TSP. Ramsey recommends investing the remaining 10% of your income in a Roth IRA. But he knows this isn't possible for everyone.
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.
![What is the safest TSP fund? (2024)](https://i.ytimg.com/vi/AONWjDeUE_4/hq720.jpg?sqp=-oaymwEcCNAFEJQDSFXyq4qpAw4IARUAAIhCGAFwAcABBg==&rs=AOn4CLA-_s6QrpC3rPbvnqqb72B8dCrtAg)
Here are some general guidelines for asset allocation based on age: 20s-30s: 70-80% stocks, 20-30% bonds. 40s-50s: 50-60% stocks, 40-50% bonds. 60s and beyond: 30-40% stocks, 60-70% bonds.
Why should I invest in the F Fund? F Fund investors are rewarded with the opportunity to earn higher rates of return over the long term than they would from investments in short-term securities such as the G Fund.
With Roth TSP, your contributions go into the TSP after tax withholding. That means you pay taxes on your contributions at your current income tax rate. The advantage of the Roth TSP is that you won't pay taxes later when you take out your contributions and any qualified earnings.
If we were all trying to just make as much as possible, we'd put 100% of our money in the C fund because it has the highest average return over its lifetime.
Your best bet is to stick with the C, S and I Funds. Here's the ratio we recommend for your portfolio: 80% in the C Fund, which is tied to the performance of the S&P 500. 10% in the S Fund, which includes stocks from small- to mid-sized companies that offer high risk and high return.
Although 1.4% of total TSP participants may seem like a small number, it is evident that becoming a TSP millionaire is achievable. Yes, you could be part of the TSP Millionaires Club.
As of September, about 95,000 of you had a TSP account with no less than $1 million. A year ago, only 65,500 did. Published by the Federal Retirement Thrift Investment Board, the millionaires' club roster fluctuates quarterly, but the trend is way up for the past year.
The 2024 IRS annual limit for regular TSP contributions is $23,000. If you are covered by the Federal Employees Retirement System (FERS, FERS-RAE, or FERS-FRAE), you will lose valuable Agency Matching TSP contributions, if you reach the annual limit before the end of the calendar year.
How long can you leave money in TSP?
A separated employee can withdraw their money from the TSP at any time, while a current employee can only withdraw money from the TSP via a hardship withdrawal or an age-based withdrawal. The TSP is clear as to what constitutes a hardship, and you must be 59 ½ or older to take an age-based withdrawal.
The primary difference between Roth and traditional TSPs is how they're taxed. Specifically, a traditional TSP is better if you want to leverage your account to decrease your current income taxes and pay for withdrawals during retirement.
To receive the maximum Agency or Service Matching Contributions, you must contribute 5% of your basic pay each pay period.
TSP Investment Funds 8/31/1990 - 3/15/2024 | TSP G Fund | TSP C Fund |
---|---|---|
1-Year Return | 4.29% | 33.54% |
3-Year Return | 3.08% | 10.53% |
5-Year Return | 2.41% | 14.50% |
10-Year Return | 2.35% | 12.85% |
Once you retire from federal service, you can no longer contribute to your TSP. However, that doesn't mean that your TSP won't continue to grow. You will benefit from compound interest, and you can still transfer retirement assets from other existing accounts, such as a 401(k) or IRA.
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