The contribution limit for TSP in 2023 is $22,500 or $30,000 for 50 or older. My TSP strategy is to max out my contribution every year. How long do you think it’ll take to reach 7 figures if I max out my contribution every year?
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⏰ Table of Contents ⏰
0:00 TSP Allocation Strategy
6:58 TSP Investment Strategy
#FIREPsyChat #FinancialIndependence #TSP
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Disclaimer: I am not a financial advisor. I am solely sharing my personal experience and opinions. All Strategies, tips, suggestions, and recommendations shared are solely for entertainment and educational purposes only. There are financial risks associated with investing. You must conduct your own research and due diligence, or seek the advice of a licensed advisor if necessary.
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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
When it comes to achieving financial independence, careful planning and strategic investing are key. For federal employees, the Thrift Savings Plan (TSP) can be a valuable tool in achieving financial freedom.
In 2023, my TSP investment strategy involves a combination of diversification and risk management. My overall portfolio will consist of roughly 60% stocks and 40% bonds.
Within my stock allocation, I plan to invest heavily in growth-oriented funds, such as the C Fund and the S Fund. These funds consist of stocks that are expected to experience above-average growth in the coming years. While they come with some additional risk, I believe that investing in growth-oriented funds will pay off in the long run.
In addition to growth-oriented funds, I will also allocate a portion of my stock allocation to more stable, income-oriented funds, such as the F Fund. These funds may have lower growth potential, but they provide a steady stream of income that can help balance out the riskier investments in my portfolio.
Within my bond allocation, I plan to invest in a mix of government and corporate bonds. While government bonds provide a higher level of safety and stability, corporate bonds can offer higher returns. By investing in both, I aim to reap the benefits of both safety and returns.
One important aspect of my investment strategy will be regular rebalancing of my portfolio. Over time, as certain assets perform better than others, my portfolio may become unbalanced. Rebalancing ensures that I maintain the desired asset allocation, and helps to mitigate risk.
Another important component of my investment strategy is setting realistic expectations for returns. While it may be tempting to expect high returns in the short term, investing is a long-term game. By setting realistic expectations for returns, I can avoid making impulsive decisions and stay on track towards my financial goals.
In total, my TSP investment strategy aims to achieve a balance of growth, stability, and risk management. By diversifying my portfolio and regularly rebalancing, I aim to achieve long-term financial independence with the help of the TSP.
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Is 30./.in the s fund a good investment
The so called strategy MIGHT work for someone who will work another 30-40 years….. it DOES NOT work for someone who is 60 today.
I have always stayed away from the I fund. It is a lousy investment fund.
By only making Roth TSP contributions at this point in your career, you're probably paying a lot more in taxes today than you would if you take the tax deduction with a Traditional TSP today and withdraw that money later when you're in a lower income tax bracket. If you're a GS-13/6 in the DC area, you're making around $130k, which puts you in the 22% tax bracket for MFJ after the standard deduction (assuming your spouse doesn't work, which would make living in the DC area impossible). Maxing out Traditional TSP contributions potentially drops you down to the 12% bracket and saves you thousands on your tax bill today. Let's say you want to retire early, like 50 with 25 years of service, and you have $1.0M in your Traditional TSP at that point. You separate from service, move the Traditional TSP into a Vanguard Traditional IRA and start a 72(t) distribution on it. You're getting about $60k a year from that 72(t) with no penalties (assumes fixed annuitization at 5%, joint life expectancy), just at a regular income tax rate. You take those 72(t) distributions, plus you still do some Traditional IRA-to-Roth IRA conversion ladder, plus maybe a part-time job and you're probably still close to the 12% income tax threshold with around $100k in taxable income before the standard deduction. Even at that taxable income level, you qualify for a massive premium subsidy under the ACA in the DC area so your monthly cost for health insurance is "only" about $700/month for a Silver plan. At age 59.5, you stop the 72(t) distributions and live off a combination of regular Traditional IRA distributions, the laddered Roth IRA funds that are now available with no penalty, and maybe a part-time job. At age 60, you start drawing your deferred federal pension (20+ years of service allows unreduced pension at age 60), reduce your Traditional IRA distributions by that same amount, and keep adding to and accessing the Roth ladder. You live on that income until age 67, at which point you start drawing you full Social Security payment and further reduce your Traditional IRA distributions, all the while continuing the Roth conversions to avoid a giant tax bill at your RMD age of 75.
No way the C fund has returned 10% a year. That's a dream rate, anyone can be a millionaire at that rate. It's closer to 6%.
I lost 20k in just one day back in February in the TSP.
Thank you for this!
I'm hoping to retire in three years, at age 65. I have my TSP allocation CSI…was wondering about G fund going into the home stretch….
Would appreciate a vid with a strategy to roll over TSP (Roth IRA) to a personal Roth IRA once a person is ready to live off their investments. Fidelity informed me today that individuals can select their own stocks with funds rolled over from another Roth IRA like TSP once it's in the account. All tax free! I like the idea of creating a cash account and diverting the dividends too it once the cash has been reinvested into the personal Roth.
Honestly, financial stuff goes mostly right over my head. I need someone to tell me what each fund is, why I would want to invest in each, how much to invest in each to achieve my goals. I want to maximize my investments, but I don't really care about the details.
May I ask, are you maximizing your contributions to whatever the max is this year? And are you basing your example on the max contribution amount ? Sorry I got lost on that part. Thanks in advance.
Your videos are the best..I'm 5 years from retiring at 58 and made many mistakes over the years after my divorce…I am trying to be aggressive now……
How can I get your free info and chart tools?
Great video, If you plan on retiring at age 45, how do you plan on addressing your health insurance coverage outside of FEHB coverage?
S and C fund not doing good under Sniffy!
If I made 130k a year. I could easily max out the roth tsp, I make 54k before deductions. Guess I'll eat rice and beans and never do anything else.
I lost about 8 k with TSP mistakes doing a percent rather than overall dollar amount.
Your video and videos like yours have made me think more about my TSP strategy. I think a lot about money and I think going forward I'm going to go use the TSP by going all C fund and put in $700 per paycheck equivalent to picking up 1 share of VOO each week. Of course the TSP is not my only account.
Interesting. Having never worked outside the private sector, I had no idea what this was about. Thank you. I learned something this morning. I may never need it, but knowledge never hurts.