## The Thrift Savings Plan (TSP)
The Thrift Savings Plan (TSP) is a retirement savings and investment plan for federal employees and members of the uniformed services. It was created by Congress in 1986 and is administered by the Federal Retirement Thrift Investment Board (FRTIB). The TSP offers a variety of investment options, including traditional and Roth accounts, as well as a lifecycle fund that automatically adjusts the asset allocation based on the participant’s age and risk tolerance.
The TSP is a defined contribution plan, which means that the amount of money that participants receive in retirement depends on how much they contribute and how their investments perform. Participants can contribute up to $19,500 in 2023 (plus a $6,500 catch-up contribution for those who are age 50 or older), and the government contributes up to 5% of their salary.
The TSP is a popular retirement savings option for federal employees and members of the uniformed services. In 2022, the TSP had over $820 billion in assets under management and over 6.8 million participants.
### Investment Options
The TSP offers a variety of investment options, including:
* **Traditional accounts:** Traditional accounts are tax-deferred, which means that participants don’t pay taxes on their contributions or earnings until they withdraw the money in retirement.
* **Roth accounts:** Roth accounts are tax-free, which means that participants don’t pay taxes on their withdrawals in retirement. However, participants must pay taxes on their contributions.
* **Lifecycle funds:** Lifecycle funds are target-date funds that automatically adjust the asset allocation based on the participant’s age and risk tolerance.
Participants can choose to invest in any of the TSP’s investment options, or they can create a custom portfolio by combining different options.
### Fees
The TSP charges a variety of fees, including:
* **Administrative fees:** Administrative fees are used to cover the costs of operating the TSP. These fees are charged annually and are based on the participant’s account balance.
* **Investment fees:** Investment fees are charged by the investment providers that manage the TSP’s investment options. These fees are also charged annually and are based on the participant’s investment balance.
The TSP’s fees are generally lower than the fees charged by other retirement savings plans.
### Performance
The TSP’s investment options have performed well over the long term. Since its inception in 1986, the TSP’s C Fund (a common stock index fund) has returned an average of 10.1% per year. The TSP’s G Fund (a government securities fund) has returned an average of 3.5% per year.
### How to Invest in the TSP
Federal employees and members of the uniformed services can invest in the TSP by contacting their payroll office. Participants can also invest online at the TSP’s website.
The TSP is a valuable retirement savings tool for federal employees and members of the uniformed services. The TSP offers a variety of investment options, low fees, and strong performance.
## What Stocks Does TSP Invest In?
The TSP invests in a variety of stocks, including:
* **Large-cap stocks:** Large-cap stocks are stocks of companies with a market capitalization of $10 billion or more.
* **Mid-cap stocks:** Mid-cap stocks are stocks of companies with a market capitalization of between $2 billion and $10 billion.
* **Small-cap stocks:** Small-cap stocks are stocks of companies with a market capitalization of less than $2 billion.
* **International stocks:** International stocks are stocks of companies that are based outside of the United States.
The TSP also invests in a variety of other asset classes, including bonds, real estate, and commodities.
The TSP’s investment strategy is designed to provide participants with a diversified portfolio of investments that has the potential to generate long-term growth.
## How to Choose the Right TSP Investment Options
The TSP offers a variety of investment options, so it’s important to choose the options that are right for you. Here are a few things to consider when making your decision:
* **Your age:** Younger participants can afford to take more risk than older participants. Younger participants may want to invest more of their money in stocks, which have the potential to generate higher returns over the long term.
* **Your risk tolerance:** Your risk tolerance is how much risk you’re willing to take with your investments. If you’re not comfortable with losing money, you may want to invest more of your money in bonds or other less risky investments.
* **Your investment goals:** What are you saving for? If you’re saving for retirement, you may want to invest more of your money in stocks. If you’re saving for a down payment on a house, you may want to invest more of your money in bonds or other less risky investments.
Once you’ve considered these factors, you can start to choose the TSP investment options that are right for you.
## Conclusion
The TSP is a valuable retirement savings tool for federal employees and members of the uniformed services. The TSP offers a variety of investment options, low fees, and strong performance. By choosing the right investment options, you can maximize your retirement savings and reach your financial goals.