This video explains all you need to know about the Thrift Savings Plan (the TSP). It’s a TSP 101 for those who want to better understand the TSP. I’ll answer these 3 main questions: (1) What do I need to know about the TSP? (2) What are the benefits of the TSP? & (3) What are my TSP investment options?
BONUS
At the end, I’ll share an AWESOME tool made by the TSP that will help you narrow down which funds to invest in.
//TOPICS
00:00 Intro
01:40 What is the TSP?
02:15 What is the difference between the Traditional TSP and Roth TSP?
02:50 Should I contribute into the Traditional or Roth TSP?
04:12 What are the benefits of the TSP?
06:34 What are my TSP investment options?
// MORE TSP RELATED VIDEOS
How to invest in the TSP (2021 Strategies):
The 8 Financial Secrets of Working in Congress –
// SAY HI
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Twitter: @Melissa_Dargan
// BUY THE EQUIPMENT
Mic 🎤 :
// LINKS MENTIONED IN THE VIDEO
TSP Funds –
TSP Investment Fund Calculator –
//ATTRIBUTION
Icons (Like, Subscribe, Bell etc):
Photo Cred from Unsplash by Brooke Cagle, Blogging Guide, Sharon McCutcheon, Connor Hall, James Hose Jr., Austin Chan, Caleb Woods, Matthew T Rader, Kenny Timmer
//CONTACT
For all subscribers and business inquiries, please use this email: askmelnmoney@gmail.com
// CONTENT
What do I need to know about the TSP?
The TSP is the federal government’s retirement plan. It is like a 401(k) plan but is open only to federal employees. It basically provides you an opportunity to save money for retirement that is in addition to any pension and social security payments.
The TSP also has Traditional & Roth options. The Traditional TSP is tax-deferred. This means you make contributions to the TSP using pre-tax dollars, and pay taxes on your savings when you withdraw funds from the TSP at retirement. The other is a Roth TSP option, where you contribute using your post-tax dollars. This way, you won’t need to pay taxes on your investments when you withdraw.
Should I put my contributions into the Traditional or Roth TSP?
Both TSPs operate primarily the same way. The main difference is the timing of your taxes.
What I chose:
When I was an entry level staffer in Congress earning $28K, I figured my tax bracket was the lowest it was going to be (I mean, I assumed I’d be earning more down the road, right? Additionally I believed that I will need more to live off of during retirement since my retirement dream is to travel), so I chose to have my TSP contributions go into the Roth option.
*** Keep in mind that the amount matched by your employer (up to 5% in Congress) automatically gets put into a traditional account. So you will pay taxes on that later.
What are the benefits of the TSP?
+ A HUGE TSP BENEFIT is contribution matching. This is basically FREE MONEY!
+ Another benefit is Low Fees. The TSP has Low Administrative Costs (known as the Expense ratio) when compared to other retirement options. Why does this cost matter? Because over time, especially with large investments, administrative fees can eat into your investment big time.
What are my TSP investment options?
The TSP offers certain pre-packaged investment options. There are 6 parts. The quick overview of the 6 parts are:
(1) Government Securities Investment Fund – “G” Fund
(2) Fixed Income Index Investment Fund – “F”
(3) Common Stock Index Investment Fund – C
(4) Small Cap Index Investment Fund – S
(5) International Stock Index Investment Fund – I
(6) Lifecycle Funds – L
Bottom Line
Hoped this video helped provide the information and tools needed to better understand the Thrift Savings Plan (TSP). Ultimately, it’s up to you to make the decision of what you invest in within the TSP investment. Good luck and may the investment force be with you!
//DISCLAIMER
The content on my YouTube 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 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.
Also, links included in this description might be affiliate links. If you purchase a product or service with the links that I provide I may receive a small commission. There is no additional charge to you! Thank you for supporting my channel so I can continue to provide you with free content each week!
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Let me know if you'd be interested in a video on TSP mistakes to avoid!
Hi Melissa
Would u suggest C funds or L funds
Plan to retire on 2045. Also U said at the beginning TSP won’t let u choose to pick
I’m new fed employee. Please advise.
I got to travel courtesy of the Army (Saigon, Bangkok, Manila, Paris, London, Rome, Monte Carlo, etc). Lifecycle funds are okay (and reflect some of the ideas of the 1990 Nobel winners in economics), but may not have enough equity exposure in retirement. Some of the initial lifecycle concepts, such as those from Vanguard, had just 20 percent stock exposure for retirees but were gradually adjusted upward as critiques of early lifecycle plans began to roll in.
Thank you so much for this info! Started with the govt 5 years ago and have no idea how tsp works. I do have a good chuck of money in there, but I want to start playing with it so I don’t have to live off dog food when I retire lol
Lol im failing
I am currently putting 100% into the C-Fund. Would you recommend that I should leave it where it is? Move it to an 80/20 to mirror the total stock market, or a 50/50 split? Thanks.
Being a single parent I stupidly didn’t contribute to my tsp for 8 years, I’m 4 yrs from retirement with very little in my account. What can I do to catch up?
I appreciate being educated on this. Your breakdowns are easy to understand… I enjoyed that
Really great video, thank you!
Usually saw forex and crypto trading as a side thing till I started making thousands of dollars from it, having an expert handle my account while I take care of my daily work has been the best part.
So how much taxes they taking from roth and traditional? The 5% matching is pretty much paying ur tax? Sorry im trying to learn tsp. I think my aunt told me something before she pass away about tsp. But i could recall she wish she withraw her tsp before when they offer her because i think they taxed her large amount. If you withold ur tsp and does not withraw it on time you will pay big amount?
Great information. 13 years in the DOD and nobody educated me
The key of not being poor is the ability to save no matter the amount of money you save.
Does how much I contribute affect how much I take home each paycheck?
Can I transfer my traditional to a roth?
I just started working for the government. I'm trying to save money for a downpayment for a house ( I live in northern VA and houses are expensive). Would you recommend I invest 5% in each TSP and ROTH TSP or would you recommend I invest 8% in TSP and 2% in ROTH TSP?
The entire federal government receives 5% matching, not just those tied to congress.
Hi, can you show step by step how to do the investments in the S and C ? I have all in the G and I want to put it 50% C and 50% S
Is it a good idea to convert my TSP into an annuity once I retire from the military? The TSP offers one….
Great video
Wish I had the choice of the ROTH when I started, by the time it was offered it didn't make sense (for me)