Ok, so you're convinced that your going to take my advice and start TSP in AT LEAST THE MINIMUM AMOUNT TO OBTAIN YOUR MATCHING FUNDS.
That means you are filling out the forms to get at least 5% of your pay deducted for TSP savings.
Good man.
(Or woman).
But where do you put it? Which fund to start?
First, bookmark this link: http://www.tsp.gov
You'll be learning about stock funds, bond funds, and the "G" fund soon. If you are already a savy stock investor- you may already know what you want to do. Great. You can skip this intro and move past go, collect $200. Or more.
If you are not sure, then, while you are educating yourself, I would strongly suggest you begin by putting all of your contributions into one of the "L" funds.
Currently, the default fund, if no other fund is chosen, is the "G" fund. It's safe. You cannot lose in the "G" fund. It pays about one cent gain every six days. But that is not a lot. That's about the same as what you would earn in a savings account in a bank. Yes, it's safe. But for a 20 or 25 year old just starting, that rate probably won't get you to be a millionaire by the time you retire. Don't just settle for putting everything in "G" because you don't know anything at all about investing. If you are choosing "G" because you know what you are doing, and what you want, that's fine. But there are better ways to invest your retirement nest egg starter while you are learning.
In 2005, the TSP introduced "L" funds. These are "life cycle" funds, meaning they automatically rebalance themselves across stocks, bonds and the "G" fund, so that young investors begin with an agressive mix, and then rebalance over time to a more conservate preservation mix. They seem to work very well.
If you are a new employee and are not sure where to put your money, try the "L" fund appropriate to your expected retirement date as a "holding cell" to begin your savings.
If you are hired in 2006, and expect to be 30 years until retirement, by all means take advantage of the L2040 fund. That is designed to be big in stocks from the get go. Likewise, if you are already 50 years old, and only plan to work 10 more years, then the L2020 fund may be more to your needs, while you learn more. It's a relatively safer investment vehicle than the L2040, but still has some possibilty of good market gains. Use it.
The designers of the "L" funds seemed to set them up very well. My advice is to pick an age appropriate "L" fund for your first fund investment style while you are learning more about how the TSP operates. In the meantime, you'll still get pretty good returns. It's well worth the investment.
Contribute today. Begin today. Pay yourself first today.
To learn more about the "L" funds, visit this website:
https://www.tsp.gov/investmentfunds/...rmance_L.shtml
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