BEST WAY to invest in the TSP
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- เผยแพร่เมื่อ 23 ก.ค. 2024
- Want to know which TSP funds to invest in or learn more about the Thrift Savings Plan (TSP)? Here are the 2 TSP funds I invest ALL my money in. As a former federal employee, I have a Thrift Savings Plan (TSP) Retirement Account. In this video, I plan to (1) reveal which two TSP funds I put ALL my money in, (2) share the percentage % breakdown of how much I put in each TSP fund and (3) explain WHY I invest this way in the TSP.
When it comes to TSP retirement and finances, I want to highlight how critical it is to understand WHY and HOW to invest. Educate yourself! Don’t just follow because "so and so said it’s a good tip." That's the fastest way to LOOSE money. This is why I’m breaking down WHY I invest the way I do and back it up with FACTS. It will help you make the best TSP investment decisions for you.
***Note: My TSP breakdown factors in that I have 25-30 years before I retire. If you are closer to retirement (like 1-5 years out), you may choose a different TSP investment strategy and funds. Check out my other video - "How to Invest in the TSP": • How to Invest in the TSP - where I cover other types of investing strategies that may be better for your situation.
// TOPICS
00:00 Intro
01:56 TSP Portfolio REVEALED! The 2 TSP funds I put all my money in are...
02:47 Why these 2 TSP funds? Reason 1 hint - Performance
05:16 Why these 2 TSP funds? Reason 2 hint - Diversify
08:30 Why these 2 TSP funds? Reason 3 hint - Results
10:03 How much I allocate in each TSP fund
//LINKS MENTIONED IN THE VIDEO & OTHER RELATED CONTENT
TSP 101: Thrift Savings Plan EXPLAINED in 15min - • TSP 101: Thrift Saving...
How to Invest in the TSP: • How to Invest in the TSP
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The content on my TH-cam videos and other social media platforms is for educational purposes only and is based on my personal opinion. It's not meant to be investment or professional financial advice. I am not a TSP advisor, financial advisor, certified accountant or a tax professional. You should do your own research and speak to a licensed professional for financial or tax decisions if necessary. Remember that investments involve some form of risk and there is no guarantee that you will be successful in making, saving or investing money; nor is there any guarantee that you won't experience any loss when investing.
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#TSP #TSPInvesting #TSPFunds #ThriftSavingsPlan #TSPRetirement #FederalGovernmentRetirement #FederalGovernmentBenefits #MilitaryRetirement #MilitaryBenefits
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Which funds do you invest in? Comment & share your breakdown here!
***Note: my TSP breakdown factors in that I have 25-30 years before I retire.
Hi. Thank you for the info and the transparency. I would like to ask you if you don’t mind. Currently I am 50/50 C and S. I am thinking of changing this now and go 100% G fund due to political unrest and other things happening which may effect those funds. And then if my prediction of the market dives under 30k for example to 25k I can go back to S and C again and ride it upward. Or do you just leave things as they are no matter what is happening in the world or economy? Thank you and I hope you understood what I am trying ask.
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Great video and advices on investing in the C & S.
I am 54, 30yrs of services and max out my contributions of 15% 50/50, 60/40 or 40/60 in C & S and have been for 20+ yrs. I made the TSP Millionaire club as of Nov 2021. Plan on retired in 8 yrs and don't intend to moves it out of C & S base on historical returns.
So if you can afford to ... contributes max into C & S.
Changed my allocation after watching this was excellent video thank you. I recommend your video to about 30 other people. Well done Melissa 🤗🤑👍🏾.
Great info and presentation! You now have me as a follower!
Thanks and glad you enjoyed it! Hope it was helpful
Yes - C & S! Great video, Melissa!👍🏼
Thanks. If someone has 10+ years, these funds for long term investing are good to consider 👌🏼
Wow. Insightful and making the change now. Just became a Federal employee and I had no clue!!! Thank you!
Hope it helps!
I love your TSP videos! They’re very clear and helpful. I changed my funds to the C & S fund last month, so I was happy to see that ours were the same. I do 80 C / 20 S.
Great choices in funds!!!
Definantly appreciate this breakdown
Happy to help!
I’m 46 been Retired from active duty almost 5 years. I needed to see this video. Never understood how to work it.
100% in S fund. I have 8 years to retirement at 62 y/o. 'Been 6 years as federal employee with around $200K so far. 'Hoping to make it to $500K by retirement. I like your channel. Good job.
The S fund is a great choice! Wow, $200k is great to have in retirement already. First and foremost, that is an amazing amount to have saved 👏🏼. Great work!!! Assuming post-pandemic US economy grows, you may be able to reach your $500k goal! Sending all the positive financial vibes your way. Keep me posted on your progress and I hope that when you retire you have more than $500k!
I basically do same due to same reason. Though I still put 20 percent into L fund. Ironicaly L fund been helpful this past year.
That’s hilarious, I just saw this video, and the funny part is that I also half 50/50 in S and C funds. I feel better after watching this video. I been in G find for last six years and two weeks ago I made this change. Sucks cause we are downtrending but I hope we go up and up
Hi Judy & thanks for sharing! I agree with the market fluctuations, it does suck. Good news is that thinking long-term, historically the market tends to rebound and continuing to invest during the market downturn does provide a good upside to make up for losses in the short term.
Same lol I was in the G then 2050 L and few months ago I made the switch to C&S I was advised by a financial advisor for the military 👌🏾
Great video. I love the way you compare funds. Question: You did not mention the retirement and age factor. I am retiring in about 3-5 years. So the risk for to lose money is important.
You are correct! With less than 5 years, people close to retirement prefer to diversify and allocate more money in less risky funds like the G and F funds. This way if there is a downturn in the market, your investment is better positioned.
I think its time I look into my tsp allocation
Great idea!
In addition to the risk v reward issue with I fund, there's the issue where the board recommended changes to the fund but Capitol Hill started interfering. I'll get my international exposure outside of TSP.
Thanks for sharing! Didn’t realize that too. Smart move 👍🏼👍🏼
I love these videos! I'd like to see a video of how you change your allocations based on your quarterly review!
Also, I had to edit this because I noticed you said you were a former federal employee. The TSP website says you can't make any more contributions after you leave federal service. Am I missing something here? lol
Thanks and you are correct, once out of federal service, I can’t make new contributions into the TSP. But I can still access and show the contribution section where people can go to change future money coming in. 👍🏼
I think you can, but you should call them and check.
Do you also change the dollar amount not just the allocations coming in?
Good video, especially for people starting out. I invested C and S primarily for 20 plus years. I went through all the crashes in the 90s, 00s and forward. But right now, if you don't think the market isn't inflated, I don't know what to tell you. The last 10 years has been crazy and a large part of it has been manipulation and speculation over true growth. This year it made zero economic sense. I really believe a crash is coming, along with the real estate market. If people are going to be in TSP for next 20 years, keep it all C and S. 10 or less, beware if you don't diversify a bit; meaning throw some in G or F to protect you a little.
Thank you for sharing your insights and I agree - the markets are at an all time high. For those with 10+ more years until retirement, C & S funds make sense for the long term. For people near retirement, it is good to consider diversifying (especially if the retiree prefers less risk).
The key will be to continue to save consistently and make smart investment decisions based on when retirement is and preferred level of risk (with G and F funds having lower risk).
Also, it will be interesting to see what happens in the market over the next few years especially given the current government spending level and prolonged low interest rates.
Would love to get your thoughts - What do you think a good TSP fund mix (% allocation in each fund) is for those closer to retirement?
@@MelissaDargan I am by no means a financial expert. And you probably have a better philosophy than me. It is just that last 10 years have been crazy. My thought would be it depends on when you plan on starting to withdraw your TSP funds and your current financial position with the TSP. People focus on when they retire/leave federal government, but the truth is they need to focus on when they will start withdrawing the funds. For example, if you are 50 years of age, plan on retiring at 55, the key question is are you going to start withdrawing TSP at 55 or wait till say 59 1/2 or later? There is a difference between 5 years and 10 years in planning. 5 years from now, I have no idea where the market will be. 10 years from now, I am more confident based on statistics and trends. The other factor you should consider is if you have already have a lot of funds/gains, how much will it hurt to lose those gains? If you have 1 million in the TSP and a crash hits, how devastated will you be to lose 30%? If you can take it in stride, keep going. If not, then start diversifying. For the record, I would never propose pulling out completely of the C fund, and it should be the larger percent of the investment for majority of people. In my amateur opinion, if you have 500k or more, and are looking to start withdrawing your TSP funds within the next 5 years, I would start putting some in the G or F (between 10% to 40% pending your psychology of risk vs reward), and keep the rest in the C.
@@MrNodeee At age 52, I did as you mention November 2021. Move from 95% stocks (C/S) to 75/25
At 10:42 you're saying you can take advantage when either C or S fund has an upside. My understanding is you're just saying since you've split the two funds you're not all out losing if you were 100% into one of them or 80-90%, right? I am asking because I've heard people talk about shifting your allocations around but they're just talking about a scenario where say the s&p drops a huge amount so they start allocating say 100% into C fund to get shares for cheap, right? AM I understanding that correctly?
100% C for the past 12 years.
Great strategy for long-term investing 👏🏼
That’s exactly how I have my investment 100% C fund
I was gonna go 50/50 on C&S
Not sure yet
I have 5 years to go what funds do I have to put
Great video! I would like to know what you invest in after you max out your TSP. Roth IRA perhaps?
For retirement, I first put as much as I am allowed in the Roth. After putting into my retirement, I invest the rest in regular index funds. This way money I put in the regular index funds can be used before retirement years.
@@MelissaDargan that for the reply! You should do a video on this topic
Love this idea and adding it to the list of future topics 👍🏼👌🏼
100 percent in C Fund.
My man
So if I adjust my contributions allocation to match my account distribution could that justify higher return rates?
Good question! I’m a little unclear what you mean by account distribution. Can you further explain?
Hey Melissia Great Video. Here is my question. I have roughly about $30,000 in my TSP. I been retire from the US Army for 6years now and currently working as a teacher. I foresee myself (with God help) teaching for the next 18 years. After watching your video, My question is this. Would it be smart to change my funds to the C and S funds or invest these funds into another account. Yes, I do have other accounts from being a teacher and one or two I do on my own. And yes, I don t need this money now. I just want to make a smarter investment with this money for the next 18 to 20 years.
Hi, can you please explain where can we see if the agency matches 5%? Thank you very much.
It will be good to check with HR or the payroll and benefits department to find out if your agency matches 👍🏼. If there is a match, be sure to make the most of it!
Look at your TSP Statement. You will see 1% and matching 4% columns next to your contributions.
I just started on the hill this year and I currently have my TSP 100% invested in L 2060 and I have about 35 years until retirement. This video is SO enlightening. I'm thinking about switching to the C or S funds. Are we allowed to switch back and forth between funds? Also in general do you think this would be a good move? I'm comfortable with risk but don't want a high risk fund which is why I went in L 2060 in the first place. Also noticed I can't see the rate of return for L 2060, is that because it's so far out?
Welcome to Capitol Hill and so glad you are thinking about the best way to start saving in the TSP. Also, thanks for taking the time to watch my video!
1. Yes, you are able to switch to other funds. It is important to note the rules about switching - To change which fund(s) you invest in, there are two transactions you can make: A contribution allocation tells us how you want to invest NEW money coming into your account. 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. After that, you can only transfer money into the G Fund. According to the TSP website, you can change from L2060 to C&S funds. Just keep in mind there are limitations (2 IFTs per month).
2. Currently the L2060 fund (as of April 2021) is made up of: I Fund 34.65% / S Fund 15.03% / C Fund 49.32% / F fund .56% / G fund .44%. With nearly 50% already in the C fund, the things that sticks out to me is the huge allocation in the I fund. If you prefer to have almost 35% in the I fund, you can stay with L2060. Personally I’m not a fan of the I fund. Historically it has underperformed compared to the C and S funds and carries higher risk than C and S. See this comparison of the individual funds - www.tsp.gov/funds-individual/
3. There is limited data on the rate of return because the L2060 fund was created June 2020. So it’s still too early to come up with 1 year worth of data. The Inception date of the L 2060 fund was 6/30/2020. It will take some time to start to gather return %.
For me, I have nearly 35 years until I retire. Since I can’t touch the TSP money until then, I choose C and S funds. Even with a downturn in the market (which probably will happen at some point in the future - look at 2002/ 2008 / 2020) historically the market rebounds.
Hope this helps! Lmk if you have any other questions. While I’m not a professional TSP advisor, I’m happy to share my experiences and what I’ve learned. People on the Hill don’t talk about this much, so I think it’s great you are learning about this early. It will make a HUGE difference once you retire - hopefully a multi-millionaire!
@@MelissaDargan This is so incredibly helpful, you have no idea. Thank you so much!! I look forward to your upcoming videos :)
@Rumer LeGendre......with 35 years before retirement I personally think you're being a bit too conservative. But, run this by a financial planner and keep watching this channel. The time to be aggressive is now.....just my humble opinion.
@@algumbs5115 No you're totally right, I actually agree. I'm going to keep tuning into this channel, doing research and definitely switching up my funds!! Thanks
@@rumerlegendre2680 100% C fund or a mix of C/S. You are to young to have G/F funds. And International lags the C/S by too much.
Hi Melissa
Would u suggest split between c and s funds or stick with one. Thanks.
It will depend on your appetite for risk.
For me, I choose to invest in both. I like to diversify my retirement investments just in case the C fund (large and mid-sized U.S. company stocks) performs differently than the S fund (small-to-mid-sized U.S. companies).
@@MelissaDargan Thank you. Love your episodes. 80 c and 20s funds what I’m thinking to do.
What I wanna see how C & S doing on your TSP. How much were your earnings?
Good question and this topic makes for a good new TSP mid-year update video for 2021. Will work on this and keep you posted!
80% C 20% G here
Have you thought of moving the finds out of the TSP account? I've been out of the government for 6 years and have thought of moving it out so I can invest it into index funds. Are you still contributing to it now?
Good question about moving the TSP money. That is definitely an option I have considered because I could consolidate all my retirement accounts. The reason why I've kept the TSP was (1) the TSP funds have a low expense ratio and (2) I considered returning to government and didn't want to file the paperwork to transfer the money out to only put it back in again. If I didn't consider returning to government, I would have rolled over the money out of the TSP and into my 401k. Moving the money would also give me more options of where I could invest my retirement savings - index funds, stocks, etc. It is important to remember, if you are not of retirement age yet, you can rollover the money from the TSP into another qualified retirement account and avoid tax penalties.
Since I left government service too, I cannot contribute into the TSP. I can only manage what money is in there now. If I return to government, I can start contributing again.
Hope this helps!
The funds available in the TSP are index funds.
@@rogerdoger9939 yup! For example the C Fund's investment objective is to match the performance of the Standard and Poor's 500 (S&P 500) Index, a broad market index made up of stocks of 500 large to medium-sized U.S. companies.
It is important to note that the TSP has limited index fund options. They have 5 core individual funds: G/C/S/F/I. Other retirement accounts may offer a wider range of index funds.
@@MelissaDargan I feel there is no need to go beyond the S&P500 or Total Stock Market index from Vanguard, Fidelity or Schwab. Until 5 years before retirement. Then add a short to intermediate bond fund, when rates are as low as they are now.
33% in C, S, and I funds. I want to diversify so that I don't get wiped out if the market crashes.
Makes sense! Definitely a way to diversify globally. For me, the I fund is too high a risk with low ROI to show for it. My rationale is also, if the US stock market goes down, global economies are intertwined, thus a US downturn would affect international stocks too. Let’s hope for global prosperity after this pandemic 🤞🏼🤑🤞🏼🤑🤞🏼🤑
I personally rode out every market crash in the C and then later in the C and S when the S was added to the TSP. Crashes are a buying opportunity. If I have 2 weeks in the G fund in the last 25 years, that's a lot. Take the emotions out of investing and you'll be pleasantly surprised 20 years down the road. Great video.....BTW 50/50 is what I run👍
@@algumbs5115 great feedback and crashes do present great buying opportunities! You’ve got smart investment moves and taking emotions out of investing is key. I’m willing to bet your TSP retirement account is thriving 👏🏼👏🏼👏🏼👏🏼
@Melissa Dargan.....and then some....wink wink 😉 😉
How many years until you retire?
Damm how long did it take your to get to 60K just finish my 1st year and only have 4K granted I’m still working under my apprenticeship pay
First off, great job at saving $4K! That is a great start and you will be grateful for beginning to save early - especially because of the power of compounding!
As for me, I started working in DC 2011 and by the time I left federal service in 2015 I saved about $36K for retirement. Since I went on to attended business school, I left my retirement funds in the TSP. Also, I've opened up my own IRA account and save for retirement there now but I've kept my original retirement money in the TSP as a way to track growth. What is crazy is that since leaving federal service, the money in the TSP retirement account alone has nearly doubled!
IMP: Consistent savings is critical and seeing how saving early compounds has been very rewarding! Only set to go up from there :)
Been doing the Dave Ramsey plan 12 years
40% C
40% S
20% I
That is another option I have heard about that other viewers do. For me, the I fund has high risk while it underperforms compared to C&S. I want to maximize my returns and based on the 10 year comparison to the ‘year to date’ returns, the C&S funds have far better rates of return. That said, past performance does not predict future gains so definitely up to the investor how to allocate the money 👍🏼
I was just reading some of Dave Ramsey's tips, currently he has it as
60% C
20% S
20% I
This is my first time changing my allocation with 3.5 years in.
Umm.. Dave Ramsey’s plan is C/S/I 60/20/20 respectively. You might wanna read up and change your allocations.
Hi I m postal worker . I m 37 married n have kids . I want to retire in 60 . I put 10% in traditional tsp but I hear long run Roth is better. Should I move to Roth ? If yes how much % is good enough ?
Good question! When it comes to choosing between Roth TSP vs Traditional TSP each person's situation is different. Some questions to ask yourself is: am I making more than what I will be earning in retirement? What will my tax situation be when I retire (ie: will you be living in a state that has zero income tax like Texas or Florida)? These kinds of factors affect choosing between a Traditional TSP vs. a ROTH TSP.
Something that may help is checking out my TSP 101 video: th-cam.com/video/jedOf1FgG0s/w-d-xo.html. At 02:15 I cover "What is the difference between the Traditional TSP and Roth TSP?" and at 02:50 I go over "Should I contribute into the Traditional or Roth TSP?"
Many times, people who are unsure choose to diversify and put some money into Traditional and some money into ROTH because they don't know what the future holds and where they will retire.
As each person has different circumstances, it may be best to consult with a personal finance advisor if you have one. Hope this helps!
@ *Tarzan* it's more important that you contribute more than 10% of income toward TSP account. Default choice is to contribute as much as you can toward traditional TSP and $6,000 (each spouse) annually to Roth IRA. If family income is low side of 22% Federal Tax Bracket ($83.5k - $178k) select traditional TSP.
Hi Melissa I recently retired. What's the best option for me. Stay on Gfund?
Hi Dennis! Thanks for sharing and best option depends on a couple of factors including, but not limited to:
1) Your risk tolerance
2) other forms of retirement income (social security, pension, annuities, other IRA/ 401ks, etc)
3) amount of money needed in retirement.
For example, for a retiree whose sole retirement income is in the TSP, avoiding any market losses during the time one needs the money in the short term may lead that individual to invest a majority of their retirement funds in the G Fund. Some people in retirement may do 70 G fund /30 in C/S/F funds.
Alternatively, for a retiree who has other forms of retirement incomes and does not rely on the TSP money to live daily, that individual may choose to invest more in higher risk funds - ie: 40% G fund / 60% C/S funds. This is because this individual can tolerate fluctuations in the market in the short-term and hopes for higher gains into retirement.
Each person has different circumstances, so it may be helpful to first evaluate entire retirement income portfolio and decide which fund is best for your situation. Hope this helps!
*Please note it may be best to consult with a personal finance advisor if you have one.
@@MelissaDargan Hi, I'm 3 years from retiring at 62 w/17 years service. I'll collect a smaller than normal pension after they tax it and withdraw FEHB. I have 6-9 months emer. cash fund and money in a Taxable acct and Roth IRA in total market and 20% bonds funds at Fidelity, totaling only .10% yearly exp. ratio. I plan on rolling over the TSP to an IRA at retirement. I plan on waiting until 67 to get S.S.I. I may get a part time job for a few years or not, not sure yet and may only w/draw some from the rolled over IRA. My question is if I'm a little aggressive, what in your opinion and I know it's 'just an opinion' and that's fine, would be an aggressive or slightly aggressive allocation in the C/S and G Funds, now, and for 'every year' which I may bump to G more, for the next 3 years until I retire. Thank You !!
I am 19yrs in service. Currently have my TSP at 5% G, 60% C, 30% S, 5% I. What do you think?
Good question and thanks for sharing! Thanks for your 19 years of service 👏🏼. To provide the best response to your question - 2 quick follow-ups: (1) how many more years do you have until retirement? (2) Is the TSP the only retirement source of income or will you also have pension?
@@MelissaDargan I plan on going up to 30yrs of service. I have mutual funds with Victory Capital as well.
Given that there is 11 more years of service, the only thing I would do differently is move the money I have in the G fund to the C or S funds until I’m 5 or less years away from retirement. Right now, with low interest rates, the G fund will probably have very low returns. Last year was less than 1% and according to the government and news, federal interest rates may not start to rise at least until 2022 (with some speculating 2024). So the money in the TSP may work better in a different fund.
Totally up to you to decided level of riskiness. Just sharing how I would allocate 👍🏼.
@@MelissaDargan thank you so much for the advice. Please keep sharing great insight and knowledge on finances. Take care.
70%c 30% s
Too late I have 5 years to go