TSP/401K Comparable Index Funds

I received the following question from a subscriber:

I have quite a large investment in a rollover IRA from my previous company’s 401K. I currently have it with Fidelity in 70/30% mix stock/bond-short term spread over about 12 mutual funds. Does it make sense if I like your system to use your TSP Newsletter advice in my rollover IRA portfolio by finding a S&P index fund with Fidelity? If so, would it be best to find more than one index fund or is one sufficient? Thanks!

This question needs to be answered in multiple segments.

What is an index fund?

First and foremost, yes you can choose to purchase an S&P 500 index fund within your IRA portfolio and follow our TSP investing strategy. But more importantly I want to address what makes an index fund. In the simplest explanation I can think of, an index fund is an investment fund that strives to replicate the performance of a given fund or some other investment type. In this case it is the S&P 500. We all know the S&P 500 is prepared by Standard & Poor (active manager) , a division of McGraw Hill Financial that publishes financial research and analysis on stocks and bonds. Well an index fund doesn’t actively manage a fund they simply build a fund that owns every asset in the index or achieves the same results by holding similar securities.

In short, all an index fund does is replicate another fund’s system at a fraction of the cost. Therefore, the S&P 500 holds 500 different companies in their fund which is VERY DIVERSIFIED. In my opinion there is no need to hold more than one index fund in your portfolio that follows a particular investment strategy. It’s just plain overkill. Now that we know you can absolutely use index funds to replicate our TSP Newsletter trading system within your own personal IRAs. What index funds are available and which ones mimic the C Fund, S Fund, and G Fund?

TSP C Fund

The top index fund that mimics the C Fund (S&P 500) is the SPDR S&P 500, ticker symbol: SPY. The index measures the performance of the large capitalization sector of the U.S. equity market and is considered one of the best representations of the domestic economy. Utilizing a market-cap weighting structure, this index invests in the 500 largest U.S. firms including names like Apple (AAPL), Exxon Mobil (XOM) and General Electric (GE). All companies must have a 50% public float to be considered for inclusion in the benchmark. – ETF DB 

TSP C Fund Index Funds

Take a look at how this fund compares to the actual S&P 500 over the last 20 years. Not too shabby is it? I have always said that the day I retire I will rollover my entire TSP Portfolio to a self managed IRA because the options that are offered are far greater than the 10 funds the Thrift Savings Plan has to offer. Let me explain, with our TSP Newsletter we identify bullish and bearish trends in order to capitalize on huge gains in our TSP Portfolios while avoiding huge losses. There will be times when we have no exposure to the market at all (bearish cycles). But what if I told you it was possible to make money while the market collapsed?

It amazes me that the average TSP member does not know this. But there is indeed an index fund that strives to do the exact opposite of the S&P 500, in short when the market is in a downward cycle you make money. The ticker symbol is SDS

ProShares UltraShort S&P500 seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the S&P500 Index. ~ ETF DB

Thrift Savings Plan Collapse

In this chart you can see that as the S&P 500 rose in the value this index decreased in value. But also take note what happened during the 2008 crash. This index fund increased in value significantly while others were losing their retirement nest eggs.

How about a little juice?

Our system limits risk significantly but what about the individuals who want to take on a little bit more risk in the stock market without fully exposing themselves or their portfolios? Well there is another index fund that simply aims to double the gains of the S&P 500. So if the S&P 500 returned 10% in one month, this fund aims to achieve a 20% gain. The ticker symbol is SSO

This index seeks daily investment results, before fees and expenses that correspond to twice (200%) the daily performance of the S&P 500 Index. ~ETF DB

TSP Investing C Fund Profits

Ever since the bull market began in March of 2009 the S&P 500 has relentlessly marched higher, but take a look at how this leveraged fund outperformed a typical S&P 500 investment. Amazing isn’t it?!

The S Fund Equivalents

iShares Core S&P Small-Cap ETF (IJR) – The index measures the performance of the small capitalization sector of the U.S. equity market.

Vanguard Small Cap Vipers (VB) – The index represents the universe of small-capitalization companies in the U.S. equity market.

These are my two favorite indexes for small cap stocks. I have done another comparison analysis for you to visualize the performance of these two indexes in relation to the Russell 2000 Small Cap Index. The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. The Russell 2000 is by far the most common benchmark for mutual funds that identify themselves as “small-cap”, while the S&P 500 index is used primarily for large capitalization stocks.

S Fund Equivalents

Great investments over time if you ask me!

The G Fund Equivalents

I’m going to keep this one short, the Thrift Savings Plan absolutely spoils us in regards to the G Fund. The G Fund was created specifically for Thrift Savings Plan members and is not offered to the general public. The great thing about the G fund is you never lose money as the fund only accumulates interest off of U.S. Treasury bonds. Index funds offered to the public attempt to “mimic” this but they are not always successful. I personally will move to cash or a money market account offered by my brokerage firm in the event of a bear market cycle.


Well there you have it! There are multiple alternative index funds that mimic the funds offered by the Thrift Savings Plan that can be used in conjunction with our system. As always if you have any questions feel free to contact us or email me directly – marvin@brickbybrickinvesting.com

Here’s to our Wealth!

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