How Are Federal Employees Investing in the TSP?

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By on September 30, 2018 in Pay & Benefits with 0 Comments

Red piggy bank with glasses surround by cash on a solid white background depicting 'smart savings'

Data provided by the Federal Retirement Thrift Investment Board, the agency that manages the Thrift Savings Plan, provide a glimpse into how federal employees are investing their retirement savings. The data are as of the end of August 2018.

Which funds hold the bulk of federal employees’ investments? The G and C Funds lead the way.

Assets by Fund

Fund Dollars (Billions) %
G Fund $220.5 38.2%
C Fund $206.4 35.7%
S Fund $76.2 13.2%
I Fund $46.5 8.0%
F Fund $27.9 4.8%
Total $577.5 100%

TSP Assets – Participant Allocation

Fund Dollars (Billions) %
G Fund $176.5 30.6%
C Fund $170.6 29.5%
L Fund $118.1 20.4%
S Fund $65.6 11.4%
I Fund $26.8 4.6%
F Fund $19.9 3.5%
Total $577.5 100%

While the G Fund is known as the “super safe” fund since it rarely, if ever, posts a negative return, the downside is that over a long period of time, this fund will lose out to inflation. While a stock fund such as the C Fund has wider variation in its up and down swings, over long periods of time it has greatly outperformed the G Fund. These are important considerations for federal employees when planning their retirement savings goals.

Interfund Transfers

Related to the above, the G Fund is also the fund into which federal employees are mostly moving. Money poured into this fund in August with $1.432 billion moved into it last month. Conversely, large amounts were moved out of the C, S and I Funds with $504 million, $463 million and $573 million, respectively, being pulled from these three funds in August. $219 million went into the L Funds and $109 million was moved out of the F Fund as well.

Fund Dollars Moved In (Out) in Millions
G Fund $1,432
I Fund ($573)
C Fund ($504)
S Fund ($463)
L Fund $219
F Fund ($109)

The moves away from the stock funds seem to indicate a concern on the part of federal employees that the long standing bull market is going to run out of steam soon. Since nobody ultimately knows what the stock market will do in the short term, advice often given by financial advisors is to not try to time the market, but rather focus on time in the market (ideally over many years) to reap the greatest investment returns.

© 2018 Ian Smith. All rights reserved. This article may not be reproduced without express written consent from Ian Smith.

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About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.

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