Be The First To Hear About My TSP Investment Strategy
In 1986, Congress changed the lives of hundreds of thousands of servicemen and women when they passed the Federal Employees' Retirement System Act. The law established the Thrift Savings Plan that offers federal employees and uniformed services similar benefits that many private corporations offer their employees under 401(k) plans.
The TSP, in my opinion, is the best way for military members to test the waters of investing. You can set a monthly allotment and watch your money grow without much knowledge about the stock market. It would be a mistake to not take advantage of the program.
Did you know there is a way to maximize your returns in your TSP portfolio? Even though investing in TSP is a very defensive, hands-off strategy to investing, there is still a possibility of making great returns by implementing a strategy to your TSP allocations. The TSP is made up of the combination of five individual funds (G, F, C, S, and I) that each have a certain level of risk and rewards attached to them. For example, the G Fund invests in non-marketable U.S. Treasury securities. In other words, they are guaranteed to make a small return on investment because they are backed by the full faith of the United States Government. The only risk attached to these type of funds is that the growth rate may not match normal inflation, but overall these are considered safe investments because they do not have the volatile characteristics of stocks.
The other funds also have their own characteristics that make them more or less risky than the other. The job of the investor is to understand them and allocate their funds safely into each of the individual funds.
That is where Smart Military Investor can help! I will detail how I analyze the stock market and how it should impact your TSP Investment Strategy. Simple concepts like capitalizing on high bond rates or allocating more money to large cap stocks when they are considered "on sale".
Stay tuned for a follow up on this post!