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As a Thrift Savings Plan (TSP) participant, you have the unique opportunity to invest for your retirement through a tax-deferred plan. While the TSP offers many benefits, there are also several things you need to avoid in order to maximize your returns. In this article, we outline the top 5 TSP no no’s that you need to avoid.
1. Not Contributing Enough
One of the biggest no no’s when it comes to TSP investing is not contributing enough. Many people make the mistake of thinking that their employer’s match is enough to reach their retirement goals. However, experts recommend that you save at least 15% of your income towards retirement. In addition, if you’re over 50, you’re able to make catch-up contributions, which can help boost your savings.
2. Ignoring Asset Allocation
Investing in the TSP can be overwhelming, especially if you’re not familiar with asset allocation. Asset allocation is the process of dividing your portfolio among different asset classes such as stocks, bonds, and cash. It’s important to have a diversified portfolio to maximize your returns and minimize risk. Ignoring asset allocation could result in higher fees and lower returns over time.
3. Taking Loans or Hardship Withdrawals
Another top no no when it comes to TSP investing is taking loans or hardship withdrawals. While it may be tempting to dip into your retirement savings for a big purchase or emergency, it’s important to remember that TSP loans come with fees and interest. Additionally, taking money out of your account before retirement could have a big impact on your overall savings.
4. Timing the Market
Timing the market is another common mistake that TSP investors make. The stock market is unpredictable, and trying to time your investments could lead to missed opportunities and lower returns. Instead of trying to time the market, focus on investing consistently over time and sticking to a long-term strategy.
5. Paying High Fees
Finally, paying high fees is another no no when it comes to TSP investing. While the TSP is known for its low fees, some investors may unknowingly pay more in fees than necessary. For example, if you invest in a TSP fund that is similar to a fund outside of the TSP, you may end up paying more in fees. It’s important to do your research and compare fees before making any investment decisions.
In conclusion, avoiding these top five TSP no no’s is crucial for maximizing your retirement savings. By contributing enough, focusing on asset allocation, avoiding loans and hardship withdrawals, not trying to time the market, and paying attention to fees, you can ensure that your TSP investments are on track for a secure retirement.
I wish I knew about this channel a lot sooner…… I also wish I never met my ex wife……….
What I have been doing is raising my TSP contribution amount to equal the percentage of the COLA increase each year.
Biden??
Do you have any content on beung5 vested on TSP…prior 4 year active duty military time. From 2010 to 2014 and I feel like I am not getting my 5 percent match
Yes, I know an idiot who after 12 yrs of service was defaulted at & stuck in a 1% contribution election 100% to the G fund. Meanwhile all his coworkers had TSP balances of $100K-$200K… -I said well here's a mirror to show you whose fault it is, & just walked away… -because he was stubborn, thought he knew it all, highly financially illiterate & ignorant, & had a selfish scarcity mindset of this is my paycheck for me today right now, wanting to hoard cash in the bank. & half way to retirement is not the time to just be realizing the gravity of what you've done & to try & play catch up, but oh well… -Some people are just a problem… -They don't listen… -Even after being told by everyone & their mother… -You can lead a horse to water but you can't make em drink.
I’m 71, I don’t know how much I need to take out by 72. I’m so confused with this TSP. I’ll be taxed so badly. Just loss
You must pay attention to what’s going on. Each fund has it place. Right now the G fund is king but that won’t last forever. Unless you get 7% and already have a big balance.
Yes the L funds are too conservative. They are for people who don’t know anything and don’t care.
Started doing seasonal investing a few years back and man those were some great years… I've been in G-Fund since Jan 2022 (wish I had moved sooner). No way did I think this much damage could be done in such a short time. I'm too close to retirement to play it fast & loose. Hope to time it right moving back to C/S/I.
Unfortunately I wasnt made aware about how to save in my TSP back in the day. So now with only 12 years left I hope that I can have a decent amount when I retire so that I wont have to get another job after retirement….smh….
Early in my career, had a senior office worker sit me down and tell me the same thing – invest big and forget about it. Just retired after 30 yrs – 7 figures. Boom!
I move my money quite often as S100% or C 100% or G 100%. Each year my return is more than each individual fund. I believe that’s the way to earn money quickly
If G fund is the worst against inflation and other L funds are in the NEGATIVE, so what is the solution to not lose money?
I have L2030 I have been losing money since 2021, what is the magic fund do you advise to put money in the fund where there are no losses?
I'm retired now so with the market down like it has been these days is not the G fund safer?
Retirement is a scam. You instantly decrease your standard of living by 40%.
Good luck stagflation is coming and returns will be very slim for the next decade like the 1970s just my prediction.
90% C, 5% S, AND 5% I FOR 30 YEARS and dont look at it. That's my watercooler advice. Lol. If you only invest in the g fund you lose out over a career of investing…by a lot
What about TSP loans??? I thought that'd be in here. I always thought that was a no, no.
Thanks for all the input. I retired 2 yrs ago and not contributing anymore.. last few month i loss 40k so now what is the best mix in allocating my money. Pls help!!
Big no-no is to never borrow against TSP. That 0% interest rate is a lie.
I've been 100% G fund since January 1st, and boy am I glad I did that. I saw all of the screaming red flags and warning signs of the fall coming. If I had stayed in C and S I'd be down 120K instead of being up 10K. That is what the G fund is for… to park your money when you see a down-turn coming. I just wish I had put it all in the G fund two months sooner. I'm very happy to have had my money vacationing in the G fund for the past 9 months, and will look to take it out when the S&P500 gets down to around 3200 or when other indicators show the bottom is near. I could be wrong, (I have been before), and of course, your mileage may vary and this is NOT advice.
Regarding No-No #5…..what if I am already retired but don't plan on touching my TSP just yet. Maybe in two years. Shouldn't I monitor it almost daily especially in these uncertain times?
Great advice. What should we look for with the mutual funds