Tom Trabucco, Director of External Affairs at the Federal Retirement Thrift Investment Board, tells the DorobekINSIDER, the July returns have brought the year-to-date numbers for some of the funds closer to even. The only funds that remain down are the C and I Funds. (See chart above.)
“People whose pay period started yesterday, first day of work is today [Monday] are being told that three percent will come out of their paycheck, they’ll pick up three percent in matching, and one percent in agency automatic along with that unless they opt out,” Trabucco says.
All of that money will be automatically put into the G Fund. Individual investors will then be able to adjust their contributions into the various funds if they choose.
Trabucco reminded those new to the TSP what each fund consists of:
G Fund – Government securities (Federal News Radio’s Mike Causey calls this the “never has a bad day” fund due to the fact that it never loses money. It’s known as the most secure fund in the TSP.)
I Fund – International stocks of 21 developed countries
C Fund – Common stocks made up of the stocks in the S&P 500.
S Fund – Intermediate and small capitalization fund made up of the stocks of small to medium-sized U.S. companies (those not included in the C Fund)
F Fund – Fixed income fund made up of government, corporate, and mortgage-backed bonds
L Funds – There are five different L Funds including the L Income, L 2010, L 2020, L 2030, and the L 2040. The numbers in these funds stand for the year the investor believes he/she will be withdrawing funds from the account. These funds are invested in the TSP core funds – the G, F, C, S, and I Funds.
“You have to keep in mind that this is a career’s worth of investments and your career is not necessarily 20 or 25 years. You could very easily work 30, 35, 40 years,” says Trabucco. “Generally, a career covers from when you’re in your early 20s to when you are in your 60s. Most people, public or private, retire at either 61 or 62.”
More information on the difference between the funds can be found at TSP.gov.
Listen to our interview with Trabucco by clicking the link above. And be sure to check back daily with the Federal News Radio TSP Ticker. The Ticker allows you to see how the various TSP funds close each day.