An overview of the new L funds announced by the TSP.
These new funds will be available starting 1 July 2020
Read more about them here:
…(read more)
LEARN MORE ABOUT: Thrift Savings Plans
REVEALED: Best Investment During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
Thrift Savings Plan’s New L Funds: The Perfect Solution for Long-term Investors
The Thrift Savings Plan, or TSP, is a retirement savings plan for federal employees and members of the uniformed services. It offers participants the opportunity to invest their savings in a variety of funds that track different indexes, including those that focus on stocks, bonds, and international investments. Recently, the TSP introduced a new category of funds into its investment lineup, called L funds.
But what exactly are L funds, and how do they differ from other TSP funds? L funds, short for Lifecycle funds, are designed to offer participants a simple and more diversified way to invest their savings over the long term. Rather than choosing individual funds and managing their own asset allocation over time, L fund investors select a single fund that automatically adjusts its asset allocation to become more conservative as the investor gets closer to retirement.
Each of the five L funds, ranging from L 2050 to L Income, invests in a mix of the TSP’s individual funds based on a target date, or the year in which the investor plans to begin withdrawing money from their TSP account. For instance, the L 2050 fund is designed for investors who expect to withdraw their money in or around the year 2050, while the L Income fund is geared towards those who are already retired and want a more conservative investment approach.
The TSP’s L funds are unique in that they offer a simple yet effective way for participants to invest their savings over time without having to worry about rebalancing or making ongoing adjustments to their portfolio. By investing in a single fund that adjusts its asset allocation over time, investors can benefit from the expertise of the TSP’s investment team and potentially reduce the risk of losses due to market volatility.
One of the key benefits of investing in the TSP’s L funds is that they offer a low-cost and transparent way to invest in a diversified mix of asset classes. Unlike some actively managed mutual funds that charge high fees for their services, the L funds’ fees are a fraction of the cost of comparable funds in the private sector. Plus, investors can easily see the underlying holdings of each L fund on the TSP’s website, making it easier to understand how their money is being invested.
Another advantage of the TSP’s L funds is that they are highly customizable according to the individual investor’s risk tolerance and retirement goals. By selecting the L fund that aligns with their expected retirement date, participants can choose a portfolio that is designed to achieve their long-term investment objectives while minimizing risk. Plus, investors can adjust their allocation to the L funds over time as their retirement goals and risk tolerance change.
In conclusion, the TSP’s L funds offer a simple and effective way for federal employees and members of the uniformed services to invest their retirement savings for the long term. By investing in a single fund that automatically adjusts its asset allocation over time, investors can benefit from the TSP’s investment expertise and potentially reduce the risk of losses due to market fluctuations. Furthermore, the transparency and low fees of the L funds make them an excellent choice for those who are looking for a clear and efficient investment strategy. Overall, the TSP’s L funds are a valuable addition to the TSP’s investment lineup and are worth considering for any participant who wants to take a more hands-off approach to retirement investing.
JW nice job on the videos, hope you get more recognition. You deserve it. I’m also active duty military but only 2 years in. I’ve been watching a couple of your videos, just finished watching the one about buying a house and now this one. My spouse and I are currently saving a good portion of our income and investing a good bit in the stock market, I recently opened up a Roth IRA for her and we’ve been educating ourselves on financial independence. I’ve been going back and forth in my head between saving for a down payment for a home and having that home solely as an investment property. Or to continue saving and investing in the stock market outside of our retirement accounts. My idea would be after collecting payment from the tenant to pay the mortgage, and saving a bit for unexpected expenses, putting any change aside into investments. Would this be too risky so early on in my career because I am planning on getting out in about 3 years as of now. What are your thoughts? Thanks a lot.
Completely agree that a G Fund default was a disservice. Can't tell you how many people I work with never touched thier TSP and had worked for years and had close to no growth due to the G Fund. Glad they changed the default.