Understanding the Different TSP Funds
The federal Thrift Savings Plan offers a variety of individual funds for wide-ranging market diversification. Whether you choose to invest your retirement dollars into index funds of domestic and international stocks or a short-term U.S. Treasury security, Federal Educators can help you find the right option for you.
The Common Stock Index Investment (C) Fund
Invested in a stock index fund following the S&P 500, the C Fund is a broad market index comprised 500 large to medium stocks of U.S. companies. This allows for potential earnings of higher investment returns with equity investments.
The Small Capitalization Stock Index (S) Fund
The Dow Jones U.S. Completion Total Stock Market (TSM) Index is the what the S Fund tracks. This market index includes small and medium U.S. companies not included in the S&P 500, allowing for the potential of higher investment returns associated with “small cap” investments. The S Fund, however, has greater unpredictability than the C Fund.
The Fixed Income Index Investment (F) Fund
This fund invests in a broad bond index fund of the Bloomberg Barclays U.S. Aggregate Bond Index. Representing the U.S. government, corporate, mortgage-backed, and foreign government sectors of the bond market, the F Fund offers the potential to earn return rates greater than money market fund rates over the long term.
The Government Securities Investment (G) Fund
Invested in short-term U.S. Treasury securities, the G Fund’s interest rates earnings can be similar to long-term government securities – with no risk of principal loss. The U.S. government guarantees payment of principal and interest. The G Fund securities interest rate is calculated monthly by the market yields of U.S. Treasury securities with four-plus years to maturity.
International Stock Index Investment (I) Fund
This fund is invested in a stock index of the MCSI EAFE (Europe, Australasia, Far East) Index. With a broad international market index of mostly large companies in over 20 developed countries, this investment opportunity allows for global equity exposure in your portfolio.
Lifecycle (L) Funds
This strategy allows for investment in a combination of the C, S, F, G, and I Funds for a targeted date, becoming more conservative as that date approaches. The L Fund is tailored to meet clients’ investment goals based on anticipated risk and return of each fund as well as timelines.
At Federal Educators, we can help you better understand your TSP investments and federal retirement benefits. Give us a call and request your free analysis at 866-226-8160.
