Allocating Your TSP Funds: How Do You Compare to Other TSP Investors?

By on May 11, 2011 in Current Events with 26 Comments

A frequent question from our readers is: “How should I allocate my money in the Thrift Savings Plan?”

We don’t provide an answer to this question for a couple of reasons.

Each person is different and an allocation that may be a good one for one person may not be a wise investment decision for another person. How long before you plan to retire or are you already retired? Which retirement system are you in and what are your other financial resources? What are your expenses? How much risk are you willing to take with your investments?

There are financial advisors who can help make these decisions after discussing these and a myriad of other questions with you after exploring your financial health and your objectives.

TSP Allocations: G Fund Is the Big Winner

But, while we won’t tell you the best way to invest your TSP funds, here is how your colleagues are investing their money. 

At the end of 2010:

  • 42% of the TSP contributions for the year had gone into the G fund
  • 20% of contributions went into the C fund
  • 9% into the I fund
  • 8% into the S fund 
  • 5% into the F fund. 
  • 16% of the TSP contributions went into the Lifecycle funds.

Different Allocations Over Time 

Over time, the allocations have changed. In part, the financial crisis that has impacted the overall investment climate in the country undoubtedly had an impact on how TSP investors viewed the risk they were taking with their future retirement funds. For example, in 2009: 45% of contributions went into the G fund.

In 2007, 32% went into the G fund. Also in 2007, 12% of contributions went into the I fund and 29% went into the C fund. And, in 2007, 14% of the contributions went into the lifecycle funds.

FERS vs. CSRS Investment Decisions

TSP investors who are in the FERS retirement system often invest their money differently than do those who are under the older CSRS system. 

Here is how FERS employees have allocated their investments:

  • G fund: 40%
  • F fund: 6%
  • C fund: 25%
  • S fund: 9%
  • I fund: 7%
  • L funds: 13% 

 CSRS employees have a stronger preference for the G fund:

  • G fund: 49%
  • F fund: 6%
  • C fund: 24%
  • S fund: 7%
  • I fund: 5%
  • L funds: 9% 

Looking at the Lifecycle Fund Allocations

CSRS employees are generally older, on average, than those in the FERS system and their retirement annuity receipts differ from those who are under FERS. So it is not surprising that there are considerable differences between how the two groups allocate their money in the lifecycle funds.

Here is the breakdown for FERS employees and how they invested in the L funds as of December 31, 2010:

  • Income fund: 14%
  • 2020 fund: 38%
  • 2030 fund: 28%
  • 2040 fund: 20% 

 

Here is how the CSRS folks invested their lifecycle funds:

  • Income fund: 39%
  • 2020 fund: 45%
  • 2030 fund: 9%
  • 2040 fund: 7% 

But, while the lifecycle funds are designed to make investing relatively painless with an allocation geared to a future retirement date, only 5% of FERS participants have their entire account balance invested in one lifecycle fund. For CSRS participants, the number invested in one lifecycle fund drops to 4%.

The number of Thrift Savings Plan participants investing in the lifecycle funds has been steadily increasing. At the end of 2010, the contributions going into a L fund totaled 16%. In 2007, the total was 13%.

So, now you now how participants in the Thrift Savings Plan are investing their money. We hope this will be helpful in making your own investment decisions. 

 

 

 

 

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

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About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters onĀ federal human resources.

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