The Thrift Savings Plan currently has 10 investment funds available at this time for federal employees and service members. There are 5 individual TSP funds designed to mimic stock market indexes and bonds. The other funds available are 5 Life Cycle Funds which base their allocation on target retirement dates.
The table below provides the historical performance of the five primary TSP Investment Funds compared to our TSP Investing Newsletter.
TSP Funds PerformanceAs of 11/01/2016
|G Fund||F Fund||C Fund||S Fund||I Fund||TSP Investing
|30 Day Return||.12%||-.69%||-1.51%||3.47%||2.11%||.12%|
|1 Year Return||1.81%||4.77%||3.34%||1.73%||-2.96%||1.81%|
|3 Year Return||6.30%||12.64%||28.82%||16.99%||-1.88%||15.80%|
|5 Year Return||9.82%||16.79%||94.94%||86.87%||35.37%||75.29%|
|10 Year Return||30.23%||60.72%||93.70%||108.85%||15.99%||194.00%|
|Value of $1000 invested on 1/1/2004||$1,477.80||$1,794.80||$2,514.20||$2,984.10||$1,868.00||$3,816.20|
The table below shows the historical performance of the five Lifecycle Funds which became available for investment on 8/1/2005 compared to our TSP Investing Newsletter:
TSP Lifecycle Funds PerformanceAs of 11/01/2016
|L Income||L 2020||L 2030||L 2040||L 2050||TSP Investing|
|30 Day Return||-.34%||-.88%||-1.26%||-1.50%||-1.72%||.12%|
|1 Year Return||2.08%||1.86%||1.83%||1.70%||1.50%||1.81%|
|3 Year Return||9.56%||12.78%||14.48%||15.45%||15.95%||15.80%|
|5 Year Return||22.24%||42.69%||52.38%||59.45%||65.72%||75.29%|
|10 Year Return||44.83%||58.84%||66.08%||69.59%||N/A||194.00%|
|Value of $1000 invested on 8/1/2005||$1,568.00||$1,807.80||$1,906.70||$1,970.30||N/A||$3,331.35|
Individual TSP Funds
- The TSP G Fund (Government Securities Investment Fund) – The safest fund offered by the Thrift Savings Plan, hands down. The G Fund invests exclusively in a non marketable short-term U.S. Treasury security that is specially issued to the Thrift Savings Plan. This fund is a great alternative during bear markets and for retirees approaching retirement within 1-3 years. Outside of those two scenarios we would highly discourage anyone from allocating their contributions to the TSP G Fund. Inflation will likely cripple the growth of any future returns.
- The TSP F Fund (Fixed Income Index Investment Fund) – This fund is invested in U.S. investment-grade bonds, as tracked by the Barclays Capital Aggregate Bond Index. Over the last decade this fund has been the best fund for individuals approaching retirement. However, we believe going forward the G Fund will offer the appropriate level of protection for individuals approaching retirement. The intent of the F Fund is to replicate returns of the overall bond market, this in theory would allow your money to grow without being eroded by inflation but also leaves you exposed to market risks such as defaults and changes in interest rates. Simply put when interest rates fall bond prices rise and when interest rates rise bond prices fall.
- The TSP C Fund (Common Stock Index Investment Fund) – This fund was designed to mimic the Standard & Poor’s 500 (S&P 500) Stock Index, which can be considered the overall pulse of the U.S. Stock Market. In theory, TSP allocations to this fund will put your money parallel to the U.S. stock market. Therefore, when the overall market is doing well this fund will do well, when the overall market is plummeting so will this fund.
- The TSP S Fund (Small Capitalization Stock Index Fund) – This fund is designed to mimic the Dow Jones U.S. Completion Total Stock Market Index which invests in the stocks of small and medium-sized U.S. companies. This fund offers one of the highest returns that the TSP has to offer during bullish markets. However, while this fund delivers high profits it also delivers significant losses during bearish markets. Individuals with a high risk tolerance are generally drawn to this fund. Nevertheless we would not recommend this fund for individuals coming close to retirement due to its cyclicality of booms and busts.
- The TSP I Fund (International Stock Index Investment Fund) – This fund is designed to mimic the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index which invests in international stocks from 21 developed countries. We don’t recommend this fund for the simple fact that you can achieve similar returns simply investing in the S Fund with far less risk. In theory, investing in international stocks would offer more profit potential but do not require the strict reporting regulations of U.S. stocks.
TSP Lifecycle Funds
The Thrift Savings Plan offers five Lifecycle Funds with allocation strategies based on target retirement dates. These allocation strategies utilize a professionally designed mix of domestic and international stocks, bonds and government securities. Specifically, each TSP Lifecycle Fund invests in the five individual TSP funds (G, F, C, S, and I Fund) we previously mentioned. TSP members choose a fund based on their expected retirement date and/or when they plan to start making withdrawals from their TSP:
- The TSP L 2050 Fund is for participants who will need their money in the year 2045 or later.
- The TSP L 2040 Fund is for participants who will need their money between 2035 and 2044.
- The TSP L 2030 Fund is for participants who will need their money between 2025 and 2034.
- The TSP L 2020 Fund is for participants who will need their money between 2015 and 2024.
- The TSP L Income Fund is for participants who are already withdrawing their accounts in monthly payments, or who plan to need their money between now and 2014.
While the Thrift Savings Plan is not the most diverse option for retirement, it is the only retirement vehicle offered to federal employees and service members at this time.
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