July 2023. Just a thought on how to minimize the fees and get the best investment out of my pay. Intrafund transfer is how you move the money that is already invested and allocate it to different funds in a different percentage. Dont try to guess when it will go up and go down. But what if you are retired and you are spending down your TSP? There is no way to recoup without putting yourself at additional risk, just to be smart with what you have now. Ive read the entire thread several times over and decided to move towards the aggressive portfolio via Paul Merriman. July 11, 2022 Thrift Savings Plan Retirement Planning Well it's official. At the end of December 2021, the C Fund had 40.3% of the TSP assets totaling $326.8 billion. And this is where I lose most people Its because I have more than quadrupled my shares while maintaining that 10.79% return I would not have a third of the shares today had I stuck with just the S&P. Im 10 years in Active service and plan to continue my 20% monthly contributions for the next ten, however that still has me FAR from maxing out yearly. Instead, use these tools to make an informed decision about the best long-term TSP strategy for you. Food for thought: The stock market (the C and S funds) have average 10%/year growth over the last 100 years. You should always be asking yourself how you would feel if the market were to lose 50%. Read the article again. I think we all really appreciate it. COVID Companies like Vanguard, Schwab, and fidelity all have such low fees now, TSP is no longer advantageous in that regard. Im not sure if youre familiar with Doug Nordman and the-military-guide, but its got some great articles for helping military members and vets. Should I split it up? Bargaining Articles of Interest. Max. What are your thoughts on the I-Fund for 2021, given the following factors: 1. I do hope they update whats held in the I fund soon. Mostly out of neglect, my fund has done well. COLA Then tsp contributions is where you change the percentage for how you want future money to be invested. It will allow you to have exposure to stock markets around the globe, including the United States and developed foreign markets. Another questionI will retire in 3-5 years and probably not go GS, would you recommend transferring my account to a broker? Or he could be looking at the same timeline as you, IDK. I am a 34 year FERS employee that retired at MRA 56 last year. Overheated stock and real estate market? I did manage to save-off $500/mo that went into a savings account (..back home..), and I was always impressed with how well that pile of cash grew. Hi Rich, I plan on staying 100% in stocks regardless. Im so confused reading so many articles. This matters, because the I fund isnt as diverse as it could be, and that could affect returns. Note: I copied the 90/10 from a Vanguard Target date retirement fund that matches when I plan to retire. Most people assume that retirement is the finish line and all investment growth stops at that point. I started in the L40 fund but have started branching out. I currently invest in F,C, S and I funds. You are super new and your investment horizon is 20 or 30 years. Suggest how to invest when you have less service years and was using 2040, but really 2020 should have been used 10 years ago, what strategies to increase value, and balance volatility. And while I will point out that the S&P had performed at 14.48% over the past 10 years, my account value would have suffered if I had just exclusively bought into it. Whatever I choose is what I stay in long term. TSP F Fund 2021. Thats what happened. Rich, I have been investing in the TSP for over 30 years. That is my situation. Some people use the law of 100 instead of 120. He explains that most notably what is missing from the TSP funds is value funds, which is a key component of his strategy to boost typical index fund returns. Not sure if the net result would be anything worth mentioning. I had everything in G. Heard that G is not great for making money, but not bad for loosing money. Bonus pay= 10% into Roth. Should I switch back? I am approaching retirement myself, and have an eclectic and somewhat conservative mix: 20% each in C, S, I, F, & G. I check my investments every weekend, and whenever any one fund drops below 18% or climbs above 22%, I re-balance via interfund transfer. A low-cost S&P 500 index fund will achieve this goal.. I cant seem to find a source to compare this specific strategy. I reveal secrets here that nobody else knows. S&P 500 index is also a great choice, and I do that in some accounts as well. If thats conservative enough for you, then a lifecycle will work, but only if you dont sell in a panic. -Investment Planning: Building wealth for your future. We follow the key technical analysis trends and momentum, as well as watch the market internals. He recommended: 40%C 40%S 20%I. Im retiring myself Aug 1,2020. The main reason for recommending this is more relaxed withdrawal fees and more investment options. Clearly IRAs offer more options but can you expound on the TSP withdrawal fees? This causes you to make far less money than you would if you stuck with the same strategy through thick and thin. Additionally, look at my most recent post about surviving a downturn. He also has TSP investment recommendations on how to invest in the thrift savings plan. I am retired so cant invest any more, but am sitting on money I didnt withdraw. Although this basically true, however there is a caveatper the TSP-536 (9/2019 TSP Tax Notice) page 6 states; The additional 10% tax generally does not apply to payments that are paid after you separate from service during or after you reach 55 Im now contributing 50/50 to L2040 and L2050. Ill fix that. It is a way to have access to the entire U.S. stock and bond market. This fund seeks to match the performance of the Dow Jones U.S. Different approach, sure Ill take that but horrible, not at all. Heres the advice you need. The markets dropping, but when is the right time to get back in? I picked my top 3 Ls then invested most in them 3 splitting them up equal. In the same newsletter in 2013, he talked about his specific advice to his trustee on how to invest the remaining money that will be left to his family: My advice to the trustee could not be more simple:Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fundI believe the trusts long-term results from this policy will be superior to those attained by most investors whether pension funds, institutions or individuals who employ high-fee managers.. would it be wise at this time to sell some of the I and bring it down to 10%, and maybe bump up C or even go the Warren buffet way and put some into F? I speak to many young troops who say they cant put that much money away. Im not sure what you mean by rebalancing, but I dont try to buy low and sell high. Thank you for the post, as I enjoyed reading about the TSP and seeing that Uncle Sam is offering an opportunity for his children to grow their wealth: Hoo-Yah! This investment choice is a popular one and is the main recommendation of JL Collins on his blog www.jlcollinsnh.com and in his book The Simple Path to Wealth. I have some serious questions about the market right now and TSP advice. Id be interested to hear what your thoughts are about the education-piece (at the soldier-level) that Uncle offers? That doesnt mean that decision always ends up being right, but if you sell everytime you think itll keep going down, youll never make money in the market. Thats a tough one. Given the huge drop in the market since March this turns out to be brilliant! TSP Invested into the TSP thinking Id get matching payments only to find out I got grandfathered into HIGH 3. I just pick a strategy i think will do well over the long term and stick with that. Its a very natural reaction with the fear of things dropping much further. It is my understanding that we are not taxed after 59.5? At the end of the day, the differences between the two will not be large. Remember, im not a licensed financial planner and I dont know your personal situation well enough to give accurate advice. I made a huge mistake and got scared by the election and moved all my funds from C/S/I: 70-20-10 into G and I am regretting not sticking the course. The only other thing I would add (because you are in the 10 year window that Rich talks about further above) is to consider G fund (for a portion) if you are risk intolerant. That being said, any combination of C or S or either one alone is really about the same thing. I cant legally advise on what you should do, Im not licensed. I currently have roughly allocations of C 37% , S 37, and I of 26%. Ive got 23 years of federal service and 15 to got until age 67. currently I put 70% in C funds and 30% in S funds. The question of what is the best TSP strategy for 2023 gets asked all the time. It reminds you to make smart financial decisions. But one caveat is something I learned from Lyn Aldens post on I fund which I didnt look carefully at. Instead of just investing in the largest companies that make up the S&P 500, you invest in those plus mid and small cap companies as well. My panic move on March 18 has cost me about $200,000 in gains to date. You definitely lost me and confused me with your explanation. Im retired and dont need money from my TSP. The amount of bonds you throw into the mix will dampen the volatility, but will also limit your upside potential during booms as well. 80% C and 20% S will closely mimic this popular index. Please send me your recommendations with supported documentation. .018%? Feel free to ask me any questions you have. Postal Service Then I saw that you actually recommend the 50/50 split. DISCLOSURE: THIS POST MAY CONTAIN AFFILIATE LINKS, WHICH MEANS I GET A COMMISSION IF YOU DECIDE TO TAKE ADVANTAGE OF A SERVICE THROUGH MY LINKS, AT NO COST TO YOU. And thanks for your time. Covid vaccine therapeutics. I did interfund transfers and reallocated contributions going in. I was just thinking that with me being 2yrs away from retirement I should try to protect what I have from big hits. I dont want to make that decision for you. The debate about which is better in the long term is a hopeless debate that I dont like indulging in. Best types of TSP allocations for current employees JL Collins "Simple Path" for TSP allocations Dave Ramsey TSP allocation Jack Bogle three fund model for TSP allocations What about the TSP Lifecycle Funds? .001% vs .018%. That sounds good to me. I just starting using Yahoo finance to track all of my investments, including those outside of the TSP and I cant find any funds with the same prices, which would allow me to track everything together. Currently I have 3 years of federal service, however I will plan to retire in 5 years at 62. The closer you are to needing to withdrawal the money, the more G or F I would throw in. -Insurance Planning: Protecting your loved ones and what you've already built. What do you think about this strategy? Ill email you separately about that. Not to mention that my bank was approximately 9,300 mi from my duty station. Only you can make that decision. Interest rate risk: an increase in interest rates may lead to a decrease in the price of the bonds in the portfolio. Yes, you can do a transfer, or a direct rollover from an IRA or an eligible employer plan into the TSP. Thrift Savings Plan. I right away contributed 20% of my pay to TSP and today (10 years thereafter) I accumulated $400K because I took TSP loan when I bought my home. I think Buffet would prefer G fund over F if it was an option for the custodian of his estate. It gives a detailed way to adjust your portfolio as you approach retirement age. Thank you Rich! Because of the tax benefit I was thinking of putting about 40% of my contribution into the Roth TSP, but do not know how to do this and if it is advisable. I dont believe you will be accurate over the long run with that strategy. Dallen Haws is a Financial Advisor who is dedicated to helping federal employees live their best life and plan an incredible retirement. I think thats a bad idea. If youre right, you save yourself some money. At this point Im a little scared to leave the comfort of having someone else manage my investments but also dont see why i wouldnt align my accounts to reflect the views of someone like Warren Buffet. And keep the rest in stocks. In my head its turning further profits moving from conservative back to aggresive investing. I hope the New Year is treating you well, Rich, and I look forward to many more engaging posts from your blog! Do you think its worthwhile to move into something more like the 90/10 (90 C&S and 10 F or G)? So sure each of those S&P shares would have more individual value, they would ultimately have a lower combined value. Im going to cut and paste from another comment I just answered 1 minute ago. Jason. TSP Annual Contribution Limit Has Changed for 2022. This is an awesome synopsis of the funds and how to mimic some of the Vanguard funds people love in the FIRE community at large. Rich.if I understand you correctly you are suggesting to get back into the lifecycle fund and just ride this out with the anticipation that the market will rebound.is there a happy medium that I could still take some chances but protect what I have and if so what would you suggest as to the specific TSP funds and what percentage should I have in each? That means this fund holds some U.S. treasuries, which means it has some overlap with the G fund. Thanks for the info. Thats timing the market, which is essentially guessing when the top and bottom is. I did go up to 5% that agency will match as of yesterday. I just need to decide how much I want to balance C and/or S against some type of more guaranteed income (G or F) to take some of the volatility out of the returns. Currently: 13% L50. Im a long-time federal employee. If interest rates are rising, it is safer to have money in the G fund. I likely will bump up the g and f fund percentages a bit. And honestly, I see why he gives this advice as this is the best option when looking at most employer sponsored 401k plans because of the high fees and mediocre investment . Now that Biden has officially won the Presidential election, what is a good allocation? Out of 3 of your recommendations Im not sure which one to pick? You gotta make your own decision on what your long term asset allocation should be. Some people may needs bonds thrown in there to soften the drops as they approach retirement or ease into it. The main reason for recommending this is more relaxed withdrawal fees and more investment options. Youll have to do your best to decide that. I dont at all recommend selling covered puts or calls (or any type of options) in an account. Index Comparison Charts. Best. Hi Rich, Im planning to retire in the next 2 yrs. Notify me of follow-up comments by email. You just have to decide what your risk tolerance is and invest. Its rate is equal to 10-year treasuries, but their liquidity and protection from interest rate fluctuations is superior to 3-month T-bills. No, there isnt. Id be curious to see performance of each strategy using a max contribution each year over 1 yr, 3 yrs, 5yrs, 10yrs, 20 yrs etc. Do you see anything terribly wrong with this thought? I just really like buy-low-sell-high and cant think of a better way now that DCA is no longer an option for me with my TSP. Would it not be feasible to get in again as it continues down there buy buying lower. Is this my only source of income in retirement, or do I have a pension, real estate, a sugar mama, or other income as a supplement? 2023 contribution limits More in this section News and resources Forms and resources Catch-up contributions New TSP features Plan news See all 2023 Contribution Limits The Internal Revenue Code places specific limits on the amount that you can contribute to employer-sponsored plans like the TSP each year. This is a great article. I been retired for 10 years from U.S.P.S. I know you probably dont have a good answer for this, but what would you suggest for someone with chronic health issues that isnt certain if theyll ever see much if any retirement funds. I dont think it matters. It was established by Congress in the Federal Employees' Retirement System Act of 1986 and offers the same types of savings and tax benefits that many private corporations offer their employees under 401(k) plans. This is where I get my weird percentages from. Over long periods of time, the total stock market index fund and S&P 500 had similar performance, and it would be hard to say for sure which will outperform in the future. Apologies if missed something. I am maxing out on my yearly contribution and I am overall satisfied with my returns but need more growth to achieve my goals. Wrong. Its definitely a decision I couldnt make for you. Thank you and enjoy your retirement + stay safe. How much is between C and S is a decision that one should not lose sleep over. I know it is all a gamble, but I am considering moving the G fund allocation to 75%. Ive also added every TSP investment option I could find that will work with the available funds. Any suggestions? Ill even go further for what the I fund is I think its the worst fund of the group . I probably wont, but thats an issue of how much risk you are comfortable with. I went 60% C and 40% S. Thanks for the insights. Taxes I do think theyre a fantastic investment for anyone whos not too actively involved in managing his/her TSP though. Access restricted to clients only. You do address this about the I fund, but I believe some of your strategies seems to equate total international stock fund with I fund, which is probably inaccurate? Any advice would be great. I dont see why it would not be a good move. Your mistake of shifting from S to C is WAY BETTER than the mistake that a lot of people make of selling into cash. IMO, The Rich on Money worldwide dominance TSP portfolio of 50% S / 50% C would be fine, I agree there is enough international exposure between C and S. Great article! Say Retire in 70s and then Live to 100!!! My current investments in the TSP are as follows; Not really sure what to do at this point. I will share what my Financial Advisor recommended. If I reach the $19,000 to soon, I will lose the government matching 5% for the remaining pay periods.