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06-05-2009 12:08 PM
I am 22 years old and I recently began paying attention to my TSP. I have contributed 10% for a little over a year.
I am really unfamiliar with investing and the terms on the information pages for the funds and lifecycle things confuse the crap out of me...
After all I did join the Army for a reason...
Anyways.... I just switched all of my contributions from 100% G fund to 25% Lifecycle 2040, 25% C fund (Common Stock Index), 25% S Fund (Small Cap Stock Index), 25% I Fund (International Stock Index)
http://www.tsp.gov/rates/fundsheet-lfunds.pdf - That is the information fro the L 2040
Also, any suggestions on websites that are geared toward clueless people about investing in these types of things would be greatly appreciated. Would it be better to stop contributing to TSP and start an IRA with the same contributions?
06-05-2009 12:57 PM
Switching out of the G fund was not a bad idea, since you're young and have a long time to go before retirement. You can weather the short term ups and downs of the market in the more stock-based funds that you are now investing in.
I had some money in the G fund, but recently transferred a large chunk of it into the stock funds. I thought it might be good timing - the G fund was stable during the extreme downturn in the equity markets, so switching it to stock fund close to the bottom (or at least I hope was the bottom) was a good move for me. This is not advice to you; it's just my own personal decision.
If you get matching funds by participating in TSP, then you should at least contribute as much as you can to maximize the match. Otherwise, you're passing up free money.
TSP has really low account maintenance fees compared to virtually every other investment vehicle out there. That means that more money goes into your account and less goes to pay the managers of the account.
06-05-2009 03:27 PM
06-05-2009 03:43 PM
06-08-2009 05:15 AM
Thanks a bunch for the information. Is it easy to follow the growth (or not) of my money? How do I keep tabs on it?
I do not get matching. That would be pretty cool though. Out of curiousity - what is the norm for people that get the match?
06-08-2009 11:29 AM - edited 06-08-2009 11:31 AM
lol, TSP makes it astonishingly difficult to follow your progress or lack thereof. The quarterly reports help some, and the annual reports finally show percentage change.
If anyone knows any financial software that automatically imports TSP share prices, please holler!
Only FERS employees get matching. Civil Service employees have a wonderful pension plan, and it's optional for them to participate in TSP.
There is an automatic agency contribution of 1% to your TSP account, whether you participate or not. Then your agency matches 1 for 1 through 3%, and then 1/2 for 1 through 5%, and then you're on your own.
Percent of Basic Pay Contributed to Your Account
You put in:
Your agency puts in:
|And the total |
|Amounts that you contribute above 5% are not matched.|
06-08-2009 05:44 PM
Oh, cool, more TSP'ers!
OP, for military TSP, you don't get matching funds, right? Civilian TSP does.
I did pretty much the same thing. I moved a lot to G fund a while back, just to preserve something , but I moved a chunk back to the other funds several months ago. I'm way under-exposed in bonds, so I got the F fund up to where I'm 40/60 bonds/stocks. (I'm 54 --you don't want this much in bonds, since you're young. Subtract your age from either 100 or 110, and that's the percentage that you should be in stocks, by traditional thinking.)
I still have half of what's left of my TSP in G fund, and the other half in investments. I figure the next time the market sags again, I'll move more into the equity funds and let them ride back up. Current new allocations are F 25% - C 35% - S 20% - I 20%. Eventually I want to have only 10-15% in G fund as my cash mad money, but I want to be a lot more confident about the economy before I'm there.
I stayed home with my kids for a long time, and I'm very late to the savings-for-retirement game, so I have to be willing to take a bit more risk.
Another thing, since you're young: TSP will probably be offering a Roth IRA option soon. With this, you'll pay taxes on your contributions, but not on your future withdrawals, and that's a killer deal for young people, when you're in a low tax bracket anyway. Be sure to check it out when it finally launches.
For those who haven't a clue what all this is about , TSP is the replacement for the original Civil Service pensions that were so generous. Now federal employees are like all the other workers, and we have to create our own retirement investments, and hope to Heaven that we guess right. But the TSP funds are dirt cheap, 1.8 - 1.9 basis points (18 cents to 19 cents per $1000.) They are strictly index funds, so they're like the classic Vanguard and Fidelity funds, but even cheaper.
G fund - sort of the equivalent of a money market fund
F fund - bonds; benchmark is the former Lehman Bros US Aggregate Index, now Barclays Capital US Aggregate
C fund - large/mid-cap stocks; benchmark is the S&P 500
S fund - small-cap stocks; benchmark is the Dow Jones Wilshire 4500 Completion Index
I fund - international stocks; benchmark is the Morgan Stanley EAFE Index (Europe, Australasia, and Far East)
hauling - Only the Army does at this time. It is up to the service as to whether they do or not.