TSP Investment Advice
To better understand the best way to invest in the Thrift Savings Plan or TSP is to first know what is TSP. Once you’ve covered that ground then you need TSP Investment Advice, it’s best to know what advantages it provides for investors like you. Having that knowledge makes it easier for you to decide whether or not the option is right for you and your plans for retirement.
What is the Thrift Savings Plan?
A Thrift Savings Plan is a retirement saving plan exclusively offered to Federal employees and members of the uniformed services. It was introduced in the late 1980s by the adoption of the Federal Employee’s Retirement System Act for government workers and members of the military. A TSP may be automatically contributed to with each paycheck earned and in some cases, matched by the agency a person works for.
Typically not taxed until after retirement age, a TSP is similar in set-up as a 401K with the employer matching a certain amount of money saved by the employee. A Roth TSP gives people greater freedom to use their post-tax dollars to invest at the same time that they are making contributions to their normal TSP with pre-tax dollars.
Advantages of Having a TSP
The advantages that come with having a Thrifts Savings Plan are well-documented. To illustrate its value, we’ve listed a few below for reference purposes. You can then see for yourself why so many civil servants opt to invest their money this way.
A TSP allows you to enjoy employer-matched retirement contributions much like you would if you were working in the public sector. That means you’re able to amass a considerably large nest egg faster than you would if you, alone, were investing. There is typically a threshold that you must reach to ‘tap’ out of employer contributions which takes time if you’re only contributing small amounts to your TSP.
Six Funds to Invest in with a TSP or Roth TSP
Both a TSP and a Roth TSP offer six types of funds to invest in. Knowing which is right for you takes time and research. It’s worth knowing a little something about each.
They are Government Securities Investment (G) Fund, Fixed Income Index Investment (F) Fund, Common Stock Index Investment (C) Fund, Small Capitalization Stock Index Investment (S) Fund, International Stock Index Investment (I) Fund, and Certain Life Cycle (L) Funds. The final option includes a mixture of individual funds securities. Each has its advantages and disadvantages which you’ll learn more about by researching the funds.
Now, you have a better understanding of the options that await you as a civil service employee.