Andrew submitted a question on www.firepsychat.com. “I am in the military. I have been investing in my TSP for the past 7 years but I never paid attention to how my money is doing. About 3-4 years ago, I re-allocated my money from the target retirement fund to spread across individual funds. I allocated 20% each to G, C, I, S, and F funds. Now I feel like my money has barely grown in the past few years. What am I doing wrong?”

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⏰ Table of Contents ⏰
0:00 Question
0:29 Choosing a Lifecycle Fund
2:24 Individual Fund Allocation

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LEARN MORE ABOUT: Thrift Savings Plans

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Allocating individual funds in a Thrift Savings Plan (TSP) is a vital aspect of managing your retirement portfolio. As a federal employee, you have access to a TSP account as a 401(k)-style retirement savings plan. Investors who manage their TSP accounts are responsible for selecting the right combination of individual funds that align with their investment goals and risk tolerance.

To allocate funds in a TSP account, you will first want to assess your financial objectives and make informed investment decisions based on your desired level of risk. TSP offers five individual funds, and each fund has a specific investment criteria that helps investors develop a diversified portfolio.

The five individual funds in a TSP account are the G Fund, F Fund, C Fund, S Fund, and the I Fund. The G Fund invests in short-term US Treasury securities and is the least risky fund among the five. The F Fund invests in corporate and government bonds and offers fixed income options for investors. The C Fund is the S&P 500 index fund, representing the most extensive market index in the TSP account. The S Fund invests in small and mid-size US company stocks, while the I Fund invests in international stocks.

When allocating funds in a TSP account, consider diversifying your portfolio by investing in a combination of G and F Funds for fixed income strategies, and the C, S, or I Funds for equity investment strategies. It is essential to monitor and adjust your TSP investments periodically as market conditions change since this can impact your retirement goals.

Recently, the TSP introduced a new lifecycle fund option that allocates your investment based on your estimated retirement date. The fund combines the five individual funds, and the allocation adjusts over time, becoming less risky as you near retirement.

In summary, allocating individual funds in a TSP account requires assessing your investment objectives, selecting the right combination of funds that align with your risk tolerance, and monitoring investments regularly. The retirement savings account of a federal employee is a great investment option and helps build wealth for post-retirement years. By making informed decisions and monitoring your investment portfolio, you’ll have a better chance of achieving your financial goals.