TSP Allocation Strategies 2020 – The Best Out There

I’m sharing several TSP allocation strategies for 2020.

The strategies I talk about in this article are:

  • S&P 500 Index Allocation
  • Total Stock Market Index Allocation
  • Warren Buffett TSP Allocation
  • Dave Ramsey TSP Allocation
  • Paul Merriman TSP Allocation
  • Total World Stock Market TSP Allocation
  • Balanced Index Fund Allocation
  • Three-fund Allocation
  • My Rich on Money Personal Portfolio Allocation

The Thrift Savings Plan (TSP) is a defined contribution plan for United States civil service employees and retirees as well as for members of the uniformed services.

It is the rough equivalent of a 401k for military and civil service employees.

I’m not here to tell you which TSP investment strategy is best, that’s a fool’s errand.  Giving this type of TSP advice is impossible.

The only way to do that is to go into the future, see how things turn out, and then tell you which TSP allocation would have been ideal.

I will, however, give you the tools to make an informed decision about the best TSP strategy for you with some food for thought.

Several of these TSP investment strategies are recommended by well-known money gurus such as Warren Buffett and Dave Ramsey. 

The Dave Ramsey TSP allocation recommendation is a widely-searched google term.

I’ve also added every TSP investment option I could find that will work with the available funds.


Below is a list of different potential TSP allocation strategies for this year you could use.  I’ve pulled these from various sources and as I discover new ones, I will update this.  Please send me your recommendations with supported documentation.

By the way, did you know the TSP recently drastically changed it’s withdrawal rules

Learn how to master your money by reading my TSP guide. Don’t miss out on tens of thousands in your retirement!

Maximize all your TSP benefits

The S&P 500 Index

This is the asset allocation I used most of my working life.

When I opened a Roth IRA in 1999, I called my bank and asked to put it in the S&P 500.  At the urging of an investment advisor (I’m not a fan of most), I put it in an aggressive growth fund instead.  In 2000, it lost half its value.

From that day forward, I decided S&P 500 would be the way I invest.  I had read before that Warren Buffett said something to the effect of, if you don’t have time to look at stock charts and read finance news all day long, you are better off investing in the S&P 500 index and never touching it.

Actually, here’s exactly what he said in 2013 in his letter to shareholders:

“Most investors, of course, have not made the study of business prospects a priority in their lives. If wise, they will conclude that they do not know enough about specific businesses to predict their future earning power…I have good news for these non-professionals: The typical investor doesn’t need this skill…In the 20th Century, the Dow Jones Industrials index advanced from 66 to 11,497, paying a rising stream of dividends to boot. The 21st Century will witness further gains, almost certain to be substantial. The goal of the non-professional should not be to pick winners…but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.”

Additionally, instead of investing his wife’s inheritance in Berkshire Hathaway stock, he plans to invest it in the S&P 500 index.

That should tell you something.

If it’s good enough for Warren, it’s good enough for me.

To mimic a full investment in the S&P 500 index, just invest 100% in the C fund.

The Total Stock Market Index

This investment choice is a popular one and is the main recommendation of JL Collins on his blog www.jlcollinsnh.com and in his book The Simple Path to Wealth.

Instead of just investing in the largest companies that make up the S&P 500, you invest in those plus mid and small cap companies as well.  This index encompasses the entire U.S. stock market (as the name suggests!)

Financial Independence Retire Early (FIRE) enthusiasts will swear to the superiority of this index to the S&P 500, and to suggest considering anything else is heresy!

It’s clearly more diversified than the S&P 500, and small caps have been known to outperform large caps over the long term, albeit with potentially a little more volatility.

Over long periods of time, the total stock market index fund and S&P 500 had similar performance, and it would be hard to say for sure which will outperform in the future.

In my opinion, you are doing great with either one.

80% C and 20% S will closely mimic this popular index.

The Warren Buffett TSP Allocation

Image from moneycrashers.com

While I mentioned earlier I got my idea for an all S&P 500 index allocation from something Warren Buffett said in a newsletter, he actually has more specific instructions I want to address here.

I talked earlier about how he had a plan for how the money left for his wife would be invested.  I said he would invest in S&P 500 index instead of Berkshire Hathaway, but that’s only part of the story.

He also has a plan to throw bonds into the mix to smooth out the ride a little bit, which is a common investment strategy.  The amount of bonds you throw into the mix will dampen the volatility, but will also limit your upside potential during booms as well.

In the same newsletter in 2013, he talked about his specific advice to his trustee on how to invest the remaining money that will be left to his family:

“My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund…I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers.”

As luck would have it, this is easy to mimic with the funds offered in the thrift savings plan.  90% C fund and 10% G fund.

Thanks Warren!

Dave Ramsey TSP Investment Advice

dave ramsey tsp allocation

I’m a huge fan of Dave’s book Total Money Makeover.  His baby steps for getting out of debt are legendary!

He also has TSP investment recommendations on how to invest in the thrift savings plan.  His caveats are typical of Dave’s approach to money.

In typical Dave fashion, he suggests that you first pay off all your debt besides your primary residence before you begin long term investing and have an emergency fund of three to six months of expenses as well.

He has two sets of recommendations.  One slightly more aggressive than the other.

More conservative:  80% in C, 10% in S, 10% in I.

Less conservative:  60% in C, 20% in S, 20% in I.

Here is the link to his recommendation.

Next: Money Guru Paul Merriman’s TSP Allocation Reccomendation:

But first…


I didn’t make all my money just from smart TSP investing.

I’ve built up a portfolio of 20 paid-off single family homes using the methods I outline in a free mini-course.

  • Even with a full-time job
  • Even while moving every 1 to 3 years
  • Even while I didn’t understand the local market

Check out my Mini-Course showing several methods to buy real estate at huge discounts and create massive cash flow.

Paul Merriman TSP Allocation Recommendations

Paul Merriman is a successful advisor on mutual fund and index fund investing.  He’s an accomplished author, speaker, and is well known for the ultimate buy-and-hold portfolio.

This portfolio is comprised of index funds and has an amazing track record.  Unfortunately, due to the various types of funds held in this portfolio, it is impossible to mimic with the TSP funds available.

If you are curious, I wrote an article about this how to invest in this portfolio:

9 Proven Ways to Boost Your Index Fund Returns

He explains that most notably what is missing from the TSP funds is value funds, which is a key component of his strategy to boost typical index fund returns.

He does make specific recommendations for TSP owners using what is available to us.

He has 3 separate recommendations based on your risk tolerance, conservative, moderate and aggressive.

With all three of these portfolios, the equity part of the portfolio is split the same way:

50% in S, 25% in C, 25% in I.

With the aggressive portfolio, the entire amount is invested this way.  The conservative and moderate portfolios have a portion of the total invested in the F and G funds.  This portion is not exposed to the risk of the stock market, as the C, S and I funds are.

His advice is that, generally, younger investors can afford to be more aggressive, and as you get older, you become more conservative, but this is a generalization and everybody’s situation may differ.

The conservative portfolio is 18% G and 42% F, and the rest in S, C and I at 50/25/25.

The moderate portfolio is 12% G and  28% F, and the rest in S, C and I at 50/25/25.

Attached is a graphic from his website outlining exactly how to do this strategy.

TSP investment strategies
From www.paulmerriman.com/tsp/

Here is the link to his article on TSP recommendations:

How to pick smarter investments in your U.S. Thrift Savings Plans

Total World Stock Market Portfolio

This portfolio mix is a TSP investment strategy modeled loosely after the Vanguard Total World Stock Index Fund (VTWSX).

It will allow you to have exposure to stock markets around the globe, including the United States and developed foreign markets.

The weakness of this portfolio compared to the Vanguard one is exposure to emerging markets. 

The I fund currently only has developed economies, and not emerging markets.  There supposedly is a plan in place to change the I fund in the future to include emerging markets, but it hasn’t happened yet.

This matters, because the I fund isn’t as diverse as it could be, and that could affect returns.

The Vanguard fund I am modeling after has roughly 60% of the portfolio in U.S. stocks, and the rest are international.  To model this portfolio, use 48% C and 12% S to make up the U.S. stock market, then use 40% I for the rest.

The 48/12 mix comes from splitting 60% into an 80/20 mix to achieve the Total Stock Market Index.

Balanced Index Fund Portfolio

This portfolio is meant to mimic the Vanguard Balanced Index Fund Admiral Shares (VBIAX).

It is a way to have access to the entire U.S. stock and bond market.  It has far less volatility than the Total Stock Market Index by using bonds to smooth out the ride.  The balance of this portfolio is 60% stocks, and 40% bonds.

This can be accomplished through 48% C, 12% S, and 40% F.

Obviously, you could adjust the stock/bond ratio to meet any level of risk that you would like.

Three Fund Portfolio

This is a favorite among Bogleheads (Those who love Vanguard and its founder Jack Bogle).

This fund is comprised of 1/3 each of the following:

  • Vanguard Total Stock Market Fund
  • Vanguard Total International Stock Market Fund
  • Vanguard Total Bond Market Fund

This fund is broadly diversified, but heavily weighted in large cap stocks.  Remember, the I fund lacks the exposure to emerging markets that the Total International Stock Market Fund has, so the thrift savings plan version won’t be identical until the I includes more countries and emerging markets.

To mimic the Total Stock Market fund, I split the 33% in an 80/20 C/S split.  This is where I get my weird percentages from.

A way to closely mimic this portfolio is: 27% C, 7% S, 33% I, 33% F.

Make sure you use these recommended allocations correctly!

Most people screw this up.

Here’s how…

My Current TSP Allocation for 2020

There are literally thousands of people who google “Rich on Money TSP Allocation” every millennium.

Until now, nobody has ever known how the brilliant mind of a master invests.

I like the idea of being a little heavier weighted on the mid-cap stocks as opposed to being just all S&P 500.  Of course, I’m going against Warren Buffett’s philosophy.

Not sure how wise that is!

I used to have international sprinkled in there at 10%, but I gave up on it.  There is enough international exposure between C and S IMHO.

Here it comes…

The Rich on Money worldwide dominance TSP portfolio:

50% S / 50% C

I know, I know. I should be charging for revealing my personal portfolio. I just have too much love and altruism in my heart (and no one reads this blog).

Best TSP Fund for 2020

Now this is the important part. I reveal secrets here that nobody else knows…

Well, maybe not.

The question of what is the best TSP fund for 2020 gets asked all the time.

It’s a fundamentally flawed question.

If you are asking which TSP fund is best, you may think that jumping between funds at the right times depending on cycles, economic data, politics, etc. will yield you superior returns.

You may also believe that experts scouring the market for data and gifted chart readers have some way of knowing which funds should outperform in the near future.

I’m here to tell you, people with those abilities do not exist.

There are many posers that make a fortune on Wall Street writing blogs and doing news segments claiming this unique gift.  When they are right, they get huge kudos and bonuses.

When they are wrong, they explain why the market didn’t do what they thought, and make a new prediction.  Eventually, they stop getting away with this, fall out of favor, and get canned.

Their successful predictions, IMHO, are largely attributable to luck.  Just because they were right this time, doesn’t mean they’ll be right next.

This concept is difficult to explain in a few paragraphs.  If what I’m saying makes a little sense to you and you’d like to know more, read the following article:

There is no best TSP fund in 2020 or any other year.  There are great TSP allocation strategies that should work if you follow them consistently over a long period of time (that means decades).

That’s what I gave you in this article. Options for great TSP allocation strategies.

Changing strategies or funds often is a recipe for low returns.

Most of these TSP investing methods should work well if you regularly contribute to your thrift savings plan, ensure you are getting matching if it’s offered, and stick with the same TSP investing strategy over the long term.

I would caution against jumping back and forth between strategies every time you find something bright and shiny.  Many people erode their long term returns by “dancing in and out of the market.” (Warren Buffett)

To understand all this TSP advice, it helps to know the five core funds inside the TSP and what they consist of.  This is important in understanding how they are used in building TSP investing portfolios.


  • The G fund contains short term U.S. Treasury securities with no exposure to the risk of the bond or stock market

  • The F fund is an index of world-wide government, corporate, and mortgage-backed bonds

  • The C fund is equivalent to the S&P 500 index.

  • The S fund is an index of mid and small-cap stocks not included in the S&P 500.

  • The I fund mimics the MSCI EAFE Index of international stocks in 21 developed markets excluding the United States and Canada.

  • The L funds are professionally managed investment funds tailored to a specific time horizon.

from opm.gov

Now we dive into each one a little more in depth before going into our TSP investment strategies:

The G Fund – The Government Security Investment Fund

Pros: No volatility and backed by full faith and credit of the U.S. government

Cons:  Can barely match the inflation rate; rate based on prevailing interest rate, which is currently low

This unique investment is only available for TSP investing.  It’s rate is equal to 10-year treasuries, but their liquidity and protection from interest rate fluctuations is superior to 3-month T-bills.

The interest rate resets monthly and is based on the average of U.S. treasuries with a duration of 4 year or more.

The F Fund – The Fixed Income Investment Fund

Pros:  Low volatility; historically outperforms G fund

Cons:  Currently has low returns as based on prevailing interest rate; loses value if interest rates rise sharply

This fund follows the Bloomberg Barclays U.S. Aggregate Bond Index, which invests in government and corporate bonds as well as mortgage-backed securities.  That means this fund holds some U.S. treasuries, which means it has some overlap with the G fund.

The returns on this fund are historically slightly higher and slightly more volatile than the G fund.

The F fund tends to be superior when interest rates are flat or falling.  If interest rates are rising, it is safer to have money in the G fund.

The C Fund – The Common Stock Index Investment Fund

Pros:  Historically has returned around 7-9% over the long term, depending on who you ask, and how you calculate.

Cons:  Can have decade long periods without gains; falls with crashes and bubbles

This fund follows the S&P 500 index, which is an index of the 500 largest and most profitable U.S. corporations.

Even though there are 500 companies in the index, the top 10 companies, which consist of big names like Apple, Google, Microsoft, and Amazon, make up 20% of the value of the fund.

The S Fund – The Small Capitalization Stock Index Investment Fund

Pros:  Similar returns to the C fund, but with more diversification

Cons:  Can have decade long periods without gains; falls with crashes and bubbles

This fund has mid and small-cap stocks, making up the rest of the stocks in the market other than what is in the S&P 500 index.  This fund seeks to match the performance of the Dow Jones U.S. Completion Total Stock Market Index.  It consists of about 3300 stocks.

The I Fund – The International Stock Index Investment Fund

Pros:  Allows for international equities to be purchased

Cons:  Only invested in developed countries, so lacks exposure to entire international market and emerging markets

This fund mimics the MSCI EAFE (Europe, Australasia, and Far East) Index, a collection of over 900 large and medium sized corporations.  Most of these companies are in Western Europe and Japan.

Keep in mind, this fund is concentrated primarily in Japan, Germany, Switzerland, France, and the UK.  Japan makes up more than 25% of the portfolio.  It is not the same as some international funds out there that have a sampling of small companies from countries all over the world.

This is actually an important consideration when equating this I fund with some of the TSP investment strategies I have listed later in this post.

When strategies call for an international index fund, they probably mean one with exposure to emerging countries and smaller companies as well as the ones listed in the MSCI EAFE.  There are different flavors of international index funds, and this I fund doesn’t quite capture the most diverse of them.

Keep that in mind when using the I fund as a substitute for international index funds in a prescribed strategy.

The L funds – Lifecycle Funds

Pros:  Asset allocation and rebalancing is done for you by BlackRock, which is one of the most respected investment firms in the world with $6.3 trillion under management.

Cons:  You have no control over your asset allocation; some say the fund is conservative

The L funds, which stands for Lifecycle funds, use professionally determined investment mixes.  You choose the L fund that matches the timeframe you plan you start needing the money in your TSP.

Currently, the L funds offered are L2020, L2030, L2040, and L2050.  If you were to choose the L2040 fund, this fund would be optimized for beginning withdrawals in the year 2040.

Using the 2040 L fund as an example, if you were to invest in it in January of 2019, it would have the following allocation:

TSP allocation
from TSP.gov

As you can see, roughly 28% is invested in the G an F funds, which are essentially treasuries and bonds.  The rest is divided up between the C, S, and I funds, which are invested in the stock market and more volatile.

This is BlackRock’s recommendation for an appropriate balance between stocks and bonds to mitigate the volatility of the portfolio.  When the stock market crashes by 40% in a month, this portfolio would go down less due to being invested 29% in treasuries and bonds.

The converse, however, is also true.  If the stock market goes up 40% in 2 months, this portfolio will go up less than that, because of the investment in less risky treasuries and bonds.

The funds allocation is adjusted quarterly to slowly move towards a much more conservative portfolio by 2040 that will at that point turn into the L Income fund which has the following asset allocation that does not change:

TSP allocation strategies
from TSP.gov

Ignore the date October 2018 on this graphic.  This will be the asset allocation in 2040 for the L 2040 fund once it matures and becomes the L income fund.

So essentially what happens with L funds is they move from being more risky to more conservative over time, ending with the L income fund, which is how the investment stays while you are actually withdrawing from it in your older years.

It the case of the L 2040 fund, it moves from the allocation in the first graphic above to the second. Quarterly reallocating the investment gradually from roughly 28% to 80% invested in treasuries and bonds.

There you have it.

If you have a recommendation for additional TSP investment options or TSP strategies, comment or email them in.

I’ll keep this updated.

Inspiration for this post came from one of my favorite posts of all time, the White Coat Investor’s compilation of 150 Portfolios Better than Yours.

Hey, I left mine!

Share your TSP allocation and reasoning in the comment section below.

News Flash!

This sad little blog has somehow caught the attention of the TSP police!

I didn’t know there were TSP Police!!

They put a gun to my head and are making me put this disclaimer on all my TSP posts.

Disclaimer:  Neither Richonmoney.com nor any of its partners or representatives is in any way affiliated with the United States Government, The Federal Retirement Thrift Investment Board or the Thrift Savings Plan, and that the service being offered is not sanctioned by the United States Government, the Federal Retirement Thrift Investment Board or the Thrift Savings Plan.

I told those TSP police to trust me on this.

No one would mistake my website for being official. My website is far too convenient and helpful to be considered affiliated with the government.

Rich on Money

100 thoughts on “TSP Allocation Strategies 2020 – The Best Out There”

  1. Hi Rich, Happy New Year-

    The TSP wasn’t offered when I was a young enlisted soldier, and I don’t know if I would have seen the wisdom of socking money away for ‘retirement’ at that age (?).

    I did manage to save-off $500/mo that went into a savings account (‘..back home..’), and I was always impressed with how well that pile of cash grew.

    I never missed the money – as it came off the top so quickly – I didn’t have time to do so! I also didn’t spend any of the money, as it was direct deposited and then “directly transferred” into said savings account.

    Not to mention that my bank was approximately 9,300 mi from my duty station…

    Thank you for the post, as I enjoyed reading about the TSP and seeing that Uncle Sam is offering an opportunity for his children to grow their wealth: Hoo-Yah!

    I’d be interested to hear what your thoughts are about the education-piece (at the soldier-level) that Uncle offers?

    I recall many of my peers having a lack of financial acumen and that it was (often) difficult to explain the most-basic-of-concepts (ie; income v outflow, direct deposit, use of a checkbook, contributing to the GI Bill, etc). This wasn’t necessarily their fault, as many of these young people had little / no ‘financial education’ or were only accustomed to the modeling of poor financial habits by their family and / or peers.

    I certainly hope that investing-education is offered and encouraged among the rank and file (?).

    As you noted, I’d also give a shout-out to your readers about ‘The Simple Path to Wealth’. I found the book to be one of the best on the topic of saving for one’s retirement, and written in such a way that it was easy to understand without being preachy or overly simplistic.

    I hope the New Year is treating you well, Rich, and I look forward to many more engaging posts from your blog!

    Cheers ~ Todd

    • Of course the education piece is important, albeit not a large focus subject on my blog.

      I have done the paperwork to transfer to the post 911 gi bill and set it up so my children can use it when I retire.

      I’m not sure if you’re familiar with Doug Nordman and the-military-guide, but it’s got some great articles for helping military members and vets.

      Here’s one about the G.I. Bill.


  2. Rich,
    I am a young sailor trying to get this TSP thing right. Im proud that i was smart enough as an 18 y/o boot to contribute to TSP and get my money out of the G fund and into L2050. I titrated my monthly contributions to 30% base pay by the time I was 8 months in. 6 years later I’m relatively happy where I’m at, but have gotten more and more mindful of whats actually happening with my money.

    At this point I’m a little scared to leave the comfort of having someone else manage my investments but also dont see why i wouldnt align my accounts to reflect the views of someone like Warren Buffet. I just made the move to transfer current and future funds as follows

    I’ll be honest, it was a bit of an impulse move. For some reason though, keeping some of the money with L fund just made me feel comfortable that someones adjusting for the market. Do you see anything terribly wrong with this thought?
    Thanks in advance,

    • If I knew the future, I’d tell you exactly how to invest. I don’t know.
      I don’t see anything terribly wrong with what you are doing. Good luck. It sounds like you’re doing well.

    • Hey Max,

      The only thing to be mindful of is that you will need to re-balance your allocation every once in a while. If one fund, say the C, does really well one year and gains 20%, while another, say the F, does badly and loses 10%, your allocation will be out of whack from where it started and you will need to re-adjust back to where you want it.

  3. great post! It’s really helpful to think about TSP the way you have broken down. It was really helpful to read your post with post from Lyn Alden’s TSP: The Ultimate Guide for 2019. I’m definitely deciding between few of the strategies you have listed.

    But one caveat is something I learned from Lyn Alden’s post on I fund which I didn’t look carefully at. You do address this about the I fund, but I believe some of your strategies seems to equate total international stock fund with I fund, which is probably inaccurate? What do you think?

  4. Thanks for the straight-forward and fact-based article on TSP funds.
    I’m a long-time federal employee. My payroll contributions are allocated as follows: 60%/10%/30% to the C, F, and G funds, respectively.
    The current value of my account is 75% in C, 7% in I, and 18% in G. Mostly out of neglect, it seems to have performed well over the long term, but I’ve been meaning to update my allocation to be more conservative 😉 So your article will be a great resource for that. Thanks again.
    Mostly out of neglect, my fund has done well.

    • I appreciate the comment. That’s good information. I’d like to encourage others to share what they are doing so people can compare and make their own informed decisions or tweaks.

  5. Suggest how to invest when you have less service years and was using 2040, but really 2020 should have been used 10 years ago, what strategies to increase value, and balance volatility.

    • I’m not exactly sure what you mean, but I’d recommend coming up with your own strategy based on the myriad of options available. I like the ones I suggested, but there are probably more out there. I’m not necessarily a fan of the L funds myself, but some like that automatic balancing.

  6. Rich,

    This is an awesome synopsis of the funds and how to mimic some of the Vanguard funds people love in the FIRE community at large. I remember reading this a while back and actually restructured my whole TSP Asset allocation strategy based on it.

    Many thanks for the awesome work you are doing on the military front!

  7. Rich

    I been retired for 10 years from U.S.P.S. M.. .y TSP retirement funds have been sitting in the G fund. I”m so confused reading so many articles. I’m finally going to make changes . 30% in C / 60%in S / 10%in I fund what do you think ?

    • Sandra,

      This stuff can be very confusing.

      If you have been retired for awhile, then you will likely have access to this money soon, once you turn 59 1/2.  You also may need to start withdrawing this money soon, if you aren’t already.

      The allocation your suggesting is very volatile, and if the market drops quickly, this allocation will drop quickly too.  If you are already long retired, you probably shouldn’t invest as aggressively as you are suggesting.  Having money in the g funds means you won’t make hardly any money when the market goes up, but at the same time, you won’t lose money when the market drops.  This makes more sense when you are older.  

      You just have to decide how much of your money you want invested in funds that will go up and down a lot (C, S, I), and how much you want in safer funds (G and F).  You could blend the safe ones with the volatile ones.

      I recommend talking to a professional to make that decision if this stuff is still confusing to you. 

  8. Hello Rich,
    I am a Federal employee with the U.S. Postal Service and I plan to retire at the end of 2021.
    My current age is 67 and I have been with the postal service since 1985 and I did buy back my time when I was in the Military to increase my service time when it comes to calculate my pension. My current investments in the TSP are as follows;
    30% each in the G, C, and S fund and 10% in the I fund.
    I would like to know if this is a good mix for me at this stage of my life or do you have a better investment mix while I have another 2 years to work and also what would you recommend what percentages to invest in the funds AFTER I retire at the end of 2021?
    Thank you Rich.

    • David,

      This is tough to answer quickly in an email. It depends on your personal situation. I will say at your age, if you are planning on withdrawing the money soon (you probably are), you should consider shifting a lot more money away from C, S, and I towards safer investments like G or F. A large drop in the market now or just as you retire would be devastating to you, so you need to consider that. I’m not a licensed professional and cannot give out that type of advice. Additionally, I don’t know enough about your personal situation to give you a tailored recommendation. Talk to a fee only financial advisor. Get recommendations.

      • Hi Rich,
        I recently made a change in my TSP allocations as you had considered me to do and moved all of the amounts that I had in the C,S and I fund into the G fund in case the market takes a nose dive before I retire in 2021. Moving forward, I am putting 70% into the G fund and 15% each into the C and S fund as I would like to get some growth for the next two years while I am still working and after I leave the postal service I will change that probably to 90% in G and 5% each in C and S.
        I was told by other financial advisors that one should always invest a small percentage into the stock market after retirement to continue growth but not to the point of losing sleep over a loss when the market drops.
        I think 10% is a small risk that I feel comfortable to invest.
        Thank you once again Rich.

        • David, I bet you are very pleased with your decision. Given the huge drop in the market since March this turns out to be brilliant! Congratulations.

          • Please! It is way too early to tell if that was the right decision or not. What price did he sell, when does he buy back in? Did he save money over not touching the money in the first place? Also, next time there is a drop in the market, he’ll think he’s good at predicting these, and sell again. That’s when the market shoots back up leaving him holding the bag. My point: Over the long run, NOT timing the market is going to win out every time!

  9. Hello Rich, what a great article! I’ve been a federal employee for 6 years, 14 more to go. I started in the L40 fund but have started branching out. I’m now 30% C, 30% S, 40% L40. I think I could do better than that. Any suggestions? I know you aren’t a professional financial adviser, but I’d like your thoughts!

    • I think the lifestyle are meant to be a balance of riskier (C, S) vs fixed income (G,F) that is appropriate for your risk tolerance. I’d either pick the lifecycle that has a risk tolerance that is appropriate for you, or build your own. I wouldn’t do both.

  10. Rich
    Could you explain the difference between contribution allocation and intrafund transfer. Is it necessary to set these two at the same percentages when making changes or what would be the reasons for changing one and not the other?

    • contribution allocation tells you how to allocate the money that comes in each month from your paycheck between funds. Intrafund transfer is how you move the money that is already invested and allocate it to different funds in a different percentage.

  11. Rich, great information. I am a 52 year old Fed with 30 years in.I have been invested 50-50 in C & S fund since the S fund was established.. I was 100 C prior to that. I am more than pleased with the performance. My question is do you think the time may be right to throw 25% into the I fund? Seems like there may be more upside at this time. I plan on staying 100% in stocks regardless. Thanks in advance.

    • I don’t want to make that decision for you. If you read my writing about the I fund, it has it’s issues. It doesn’t invest in smaller countries, only well established ones. I can tell you I’m not planning on investing in the I fund myself. I can’t tell the future, though. I like C and S for the long term.

  12. Rich,

    Lots of great information! One comment: your TSP guide indicates that you will suffer additional tax penalties if you start taking TSP withdrawals under age 59 & 1/2 . Although this basically true, however there is a caveat……per the TSP-536 (9/2019 TSP Tax Notice) page 6 states; “The additional 10% tax generally does not apply to payments that are paid after you separate from service during or after you reach 55…..”. Based on this I am assuming I can retire from service with minimum age & years requirement met (i.e. 32 years of service at age 56 and 2 months) and start taking TSP withdrawals/monthly payments without and additional tax penalties. Do you agree?


    • I believe that is right, but you’ll want to double check with someone at the TSP. There actually are other ways to access the money before 59 1/2 as well, but I don’t go into those in this particular post.

  13. rich…do you know what happened to the L2025 lifestyle fund we were supposed to get this year…have not heard anything more about it

    • Warren Buffett has been quoted many times recommending the S&P 500 index fund as an investment strategy over picking individual stocks. The 10% in bonds is something he decided for his own heirs. I don’t think that’s an important part of the calculation. Anyone can use a certain percentage of bonds if they would like bring down the volatility of their investment.

  14. This article encouraged me to take a look at my account distribution. I have had my monthly contributions split 80/20 C&S for some time now. With that said maybe my account could use a little rebalancing Rich. Do you think its worthwhile to move into something more like the 90/10 (90 C&S and 10 F or G)?
    Currently: 13% L50. 51% C. 36% S.

    I see nothing in the recommended strategies regarding L funds haha. I’m 10 years in Active service and plan to continue my 20% monthly contributions for the next ten, however that still has me FAR from maxing out yearly. Thanks!

    • I think legally I can’t make recommendations for other people, but I’ll tell you how I reason for my own investments.

      The L fund isn’t really meant to be blended with other funds. It’s already a mix of all funds made by supposed experts. I find it a little conservative for my tastes.

      I don’t see a big difference between C or S. Both will have roughly the same returns. Arguing which is better is really splitting hairs. I just need to decide how much I want to balance C and/or S against some type of more guaranteed income (G or F) to take some of the volatility out of the returns. The closer you are to needing to withdrawal the money, the more G or F I would throw in.

  15. I have been in the L2030 for quite a bit and was fortunate to break a million just recently and plan to retire in 5 years (2025) and due to the current coronavirus concerns I lost 187K in a little over 2 weeks and have since switched my TSP to 50% G and 50%F is this a strategy that will gain over time or should I revert back to a life cycle fund and if so when should I be looking to switching to more conservative investing, thanks for the help.

    • You’ve decided that you want to try to time the market, and you moved everything from a lifecycle fund to bonds and treasuries. You already took a drastic step, so it’s hard to give helpful advice now. My advice would be “Don’t sell in a panic.”

      You locked in the losses that you saw on paper. Those losses aren’t realized until you sell, which you did.

      It’s a very natural reaction with the fear of things dropping much further.

      I preach relentlessly to not sell in panics and lock in losses. The chances that you will buy yourself back in at a lower price is usually slim.

      The lifecycle fund adjusts quarterly slowly towards a more conservative portfolio. If that’s conservative enough for you, then a lifecycle will work, but only if you don’t sell in a panic.

      • Absolutely correct, Rich.

        Whenever the market experience a shock such as March 2020, the absolute worst thing you can do is sell stocks & lock in your losses.

        Anyone in an L fund would have their allocations automatically re-balanced. For people with a more hands-on approach to allocation, the best thing to do is re-balance after a significant market gain or loss. This will allow you to “buy low, sell high”.

        You should always be asking yourself how you would feel if the market were to lose 50%. If the answer is “so scared that I would consider cashing out” your allocation is too aggressive.

        I too am approaching retirement age, and I have gradually cut back to a pretty conservative allocation over the past few years. This allowed me to minimize losses in March, and re-allocate to realize gains in April, which I locked in by re-allocating again in May.

        Again, the beauty of an L fund is this is all done for you. I’m just a little too hands-on for that, though.

  16. Rich….if I understand you correctly you are suggesting to get back into the lifecycle fund and just ride this out with the anticipation that the market will rebound….is there a happy medium that I could still take some chances but protect what I have and if so what would you suggest as to the specific TSP funds and what percentage should I have in each? Thank you so much for your advice

    • I sent you an email separately. The target funds are decent for this. You can also built your own percentage between the C and F fund that makes sense for the amount of volatility that you can accept. Google the 100 minus your age rule. It’s not exactly, but it gives you an idea.

  17. Rich

    I did see your separate email and thought I responded, thank you. I’ve decided that my emotions got the best of me and have stayed in the C Fund for now and hope to gain some $$$ (I have a ways to go – being down 25% in the last two weeks) before I lock it up in the G Fund and then use your suggestion of the C and F for future contributions, I’m not a Finance guy and trying to educate myself the best way I can, so thank you for taking the time to help.

  18. Rich,

    Thanks for your knowledge and great information on the website. I have a while to retire possibly 2045 to 2050. With all this chaos going on with the CVD-19 I see that I had a 10K loss over this past month. My stance is 50% C-fund/ 25% F-fund/ 15% S-fund/ 10% L-2050. With all this going on I don’t want to join the bandwagon and “panic”. But with this second interest rate cut to zero. I am to look into more of the F and G funds temporarily until things seem to turnaround or should I be putting more into the S and C funds to buy the dip as they call it. Thanks for your words of wisdom.

    • You don’t have a 10k loss unless you sell. You just have a 10k potential loss if you need the money today. I’m going to cut and paste from another comment I just answered 1 minute ago.

      First, I’m not a financial planner, so I’ll just tell you what I think I would do with my money.

      I’m not in any G or F fund at the moment. I’m all C and S. I am currently maxing my tsp contributions each month. I would continue to invest as normal now. This will just be a blip on the radar by the time I need the money in 15 years or so.

      I totally understand that if I bought more C and S now, it could continue to go down during this pandemic, and that wouldn’t bother me.

  19. Hi Rich i did the same thing that Stephan did, and i moved everything to the G found when i was 100% in the L. what should I do stay In the G or go back to the L?

    Thank you

    • That’s a tough call. The markets dropping, but when is the right time to get back in? Who knows. You’ll have to do your best to decide that. It’s hard to do. No one else knows either, but some will pretend they do.

  20. Hi Rich,

    Great article! I have been 50/50 C/S since dumping “I” ~5 years ago. And it has done well for me, as you must be aware. I recently retired from the Guard, which meant I left my T-32 position as well, so I no longer have Dollar Cost Averaging working in my favor (I have CIV and MIL TSPs). About the same time I dumped “I”, I started re-balancing about once a year to supplement DCA with more buy-low-sell-high tactics. Most of the pundits that talk about re-balancing are discussing stock/bond risk, but that doesn’t apply in this case.

    Now to my question for you; do you think re-balancing during corrections and advances is wise with this strategy? I can’t seem to find a source to compare this specific strategy. I re-balanced in Jan and now I’m about 55/45 as of today 19 Mar, which is about double of what I like “my” swing to be. I fully expect the market to return to previous levels and would plan to re-balance again at that point.

    Additionally, I have been mulling over a 45/45/10 C/S/G split when we stabilize again so that I have TSP liquidity to inject during these roller coasters without locking in losses. Albeit the lack of growth in G could be considered a loss in long bull markets. I just really like buy-low-sell-high and can’t think of a better way now that DCA is no longer an option for me with my TSP.

    Any thoughts would be appreciated. And thanks for your time.

    • I’m not sure what you mean by rebalancing, but I don’t try to buy low and sell high. That’s timing the market, which is essentially guessing when the top and bottom is. I stick with my monthly investing regardless of the status of the market, and I don’t sell into treasuries and bonds.

      • Re-balancing in this example just means doing occasional inter-fund transfers to keep accounts at the same ratio as your contributions. In other words keeping C/S account balances at a 50/50 mix.

        Thanks for your reply. Stay safe and enjoy your upcoming retirement.

  21. This is an awesome comparison of different strategies that is just the thing I was looking for as I attempt to invest more aggressively for the long term while stock prices are low. Thank you very much for this post.

  22. “The chances that you will buy yourself back in at a lower price is usually slim.”
    With such a drastic drop and still more potential to go down would you still consider this to be true? I reduced my position on the C fund and moved the funds to the G (I locked in about a 50k lost). Would it not be feasible to get in again as it continues down there buy buying lower.

    • There is potential it could keep going down, maybe a lot more. The common wisdom is not to sell in a panic. That doesn’t mean that decision always ends up being right, but if you sell everytime you think it’ll keep going down, you’ll never make money in the market. It’s a tough call. I’m not a financial advisor, so I can’t give out specific advice to your situation. I will say I’m not selling. I’m going to continue buying as the market goes down. that means I’m getting my shares cheaper and cheaper each month is goes down.

  23. I am BRAND NEW in this TSP game and currently at 100% L 2050 with a whopping $5k total invested. With the current market, I’d like to mix it up and maximize the little that I have.

    80/20? 80/10/10? 60/20/20? Hold!?!

    • I’m not a licensed professional (I think I have to say this legally, but licensed professionals aren’t all that anyway). If you are getting started and have a long time ahead of you, some find that these lifecycle funds are too conservative. I think one can be 100% equities (C,S, maybe I) until they are within 10 years of wanting to withdrawal the money.

      • Hi Rich, Im planning to retire in the next 2 yrs. I currently invest in F,C, S and I funds. I recently changed my allocations by allocating most of my contributions G and F and lowered the contributions in C ,S and I. Should I also do and Interfund transfer to protect my current funds from a potential dives in the market.

        • That’s a tough one. It’s definitely a decision I couldn’t make for you. You need to decide how willing you are to subject your money to market risk. How close are you to needing the money? That should be a gauge of how much risk you can take.

  24. I have some serious questions about the market right now and TSP advice. I am super new and want to maximize the future boom of the reinstating market. Can we talk?

    • Here’s the advice you need. This current market means nothing. You are super new and your investment horizon is 20 or 30 years. This will be a blip on the radar by the time you need this money. Put the most money you can into TSP and IRA each month until you retire. Don’t even think or blink when stuff like this happens. You’ll retire rich and be glad you didn’t try to time the market like a punk.

  25. Thanks for this Rich, it’s a very good place to see what others are doing.

    Like you, I’m not invested in an L fund. I do think they’re a fantastic investment for anyone who’s not too actively involved in managing his/her TSP though. They do run a little conservative, but that can be somewhat mitigated by picking a later date than you would think i.e. someone retiring in the next decade could go with the 2040 fund instead of the 2030.

    Over the years I have maxed out a vanguard Roth IRA and used that to invest in market segments underserved by the TSP like Emerging Markets, REITs, Inflation-Protected Securities, Foreign Bonds, etc.

    I am approaching retirement myself, and have an eclectic and somewhat conservative mix: 20% each in C, S, I, F, & G.

    I check my investments every weekend, and whenever any one fund drops below 18% or climbs above 22%, I re-balance via interfund transfer. This forced me to buy stocks as they bottomed out in March, and sell them as they climbed in April. I know this smacks of market timing, but it’s what the L funds do on a daily basis.

  26. Rich,
    I am retiring in 5 to 7 years. I am 100% C fund and have not changed since I began with TSP. I am thinking I should now go perhaps 50/50 C and F fund. If you were in that position, what would you do?

    • I’m retiring in 8 weeks. I’m not changing from 100% split beetween C and S. It’s up to you. Loss volatility means you can lose less, but you in an up market you also make less. How much does that matter to you?

  27. Currently I have 3 years of federal service, however I will plan to retire in 5 years at 62. Should I transfer my orphan retirement fund from my old employer into TSP? How would you invest the funds?

    • Nope, I would take my TSP and roll it into an IRA as soon as I could. You have more control over the funds, and there are more investment options. Companies like Vanguard, Schwab, and fidelity all have such low fees now, TSP is no longer advantageous in that regard.

      • @Rich, thanks for that update on management fees. Always thought TSP would be king there. But I see now, at least VFIAX is actually lower.

        @Lily, I fully respect this article and Rich’s reply comments including yours, glad you found the site. Others including me, do the same 50-50 split between C&S, but that doesn’t mean it is the right thing for you, especially with your withdrawal horizon much closer than mine. Just because Rich is retiring from the USAF soon doesn’t mean he will be living off that money soon. Military retirement could be as early as 37. A full 20 year difference possibly, and totally different risk tolerance. Or he could be looking at the same timeline as you, IDK. Rich’s comment above surprised me about management fees and is something to consider and research. The only other thing I would add (because you are in the 10 year window that Rich talks about further above) is to consider G fund (for a portion) if you are risk intolerant. To my knowledge, it is the only investment that is guaranteed to not to lose $ value, and TSP is the only place you can get it. But, it doesn’t keep up with inflation, so you are actually losing real life value, not for the risk tolerant like myself (yet?). That future option may be the only reason I leave some money in TSP. Management fees are one of my major concerns when investing and TSP used to be the gold standard. If you haven’t found this yet, take a look at “www.tsp.gov/InvestmentFunds/FundsOverview/expenses.html” and compare with other commercially available funds like the one I listed above and OGIYX for contrast. The costs can vary widely as well as their returns and together can give you a better SWAG (or more informed decision if you prefer).

          • You are only eligible to roll it over to another institution once you’ve separated from service. If you are still working, then you can’t do a rollover.

            If you are separated or retired, then I believe rolling it over is the smartest move because you’ll have more control and less regulations.

  28. Rich,

    I am a federal worker and contribute the annual max amount into TSP. I have about 10 more years to go before retiring. As of now none of my TSP is in the Roth TSP. Because of the tax benefit I was thinking of putting about 40% of my contribution into the Roth TSP, but do not know how to do this and if it is advisable. Any advice would be great.

    • I don’t think it matters. The important thing is, you are saving as much as possible. The debate about which is better in the long term is a hopeless debate that I don’t like indulging in. Personally, I’d go Roth, but who knows.

  29. Hi Rich,

    This is probably a stupid question, but when doing an interfund transfer, is it best to transfer funds from a higher share-priced fund to a lower priced fund? Thinking of transferring from the 2050 to the 2055 fund.

    Thank you

  30. Rich,

    I am a FERS-Law Enforcement retiree, age 54. I can, but I do not draw from TSP currently. My current allocation is 43% G, 3% F, 43% C, 7% S, 4% I. My current balance is just over $820K. My retirement advisor back in 2018 recommended this allocation and it has served me well last few years. I’m not a big political guy but my gut says the current administration has a lot to do with that.

    My concern is this is an election year and if the current administration is voted out, this current allocation will result in a big loss in value. I know it is all a gamble, but I am considering moving the G fund allocation to 75%. Do you have an opinion on this? What would be YOUR strategy in the circumstances described?

    • Bad Bad Bad. We don’t make any adjustments based on politics or election years. We only make adjustments based on risk tolerance. Can you handle big ups and downs in your portfolio at this point in your life, or do you want to hedge your bets by adding in a percentage of g and f funds. This limits your downside, but also limits your upside. Don’t even consider politics, election year, news, viruses, or alien invasions.

      • Thanks Rich. I’m with you on that advice. My total overall value has nearly recovered 100% from the March/April stock market downturn (lost around $100K on paper) and it’s currently back to nearly the same value as it was in January ($825K).
        I really can’t handle huge long term DOWNS in my portfolio at this point in my life life. I likely will bump up the g and f fund percentages a bit.

  31. Hi Rich, Thanks for your insights and this great forum. I am about four years from retirement and wondering what adjustments might be prudent. Currently, my account distribution is C 70%, G 20, S 10 and my contribution allocation is C 80% and S 20. I thought I saw that you have C 50 and S 50 (for fund distribution and allocation?). Would that be a good strategy for me, at this stage, as well? Or is there a slightly more conservative approach that you would suggest?

    • Can’t answer that for you without knowing a lot about your personal finances. What level of risk can you accept at this point in your life? I’m fine with an aggressive allocation, even in retirement. Some people may needs bonds thrown in there to soften the drops as they approach retirement or ease into it. Can you survive a huge drop in the market? Then adjust accordingly.

  32. Hi Rich. I understand that this is your last day of work! Congrats and happy retirement!!

    I am a letter carrier of 25 years, 54 and plan to work till I’m at least 59 1/2. I am currently invested 50% C 30% S 20% F
    I will gradually lower my exposure each year till I retire, but the question is should I be moving into the F or G fund to limit losses in case of downturns?

    • If you know when the market will dive, then you know if you should move it or not.

      I’m joking, nobody knows that. It depends on how soon you plan to start withdrawing this money. Most people tend to add F and G as they approach the years they need to withdrawal. I probably won’t, but that’s an issue of how much risk you are comfortable with.

  33. Rich
    I’ve been 50% S and 50% C for many years (after I finally bailed on the I fund) and have been thinking about tweaking it. I was searching the internet to see if my 50/50 split was a true reflection of a total stock market index fund and saw where you said 80% C / 20% S closely approximated it. So I thought, aha, that’s what I’ll change it to. Then I saw that you actually recommend the 50/50 split. I am curious why you like the 50/50 vs an 80/20 (that better reflects the total stock market). Thanks, and I enjoyed reading your page.

    • Scott,

      I can’t legally advise on what you should do, I’m not licensed. That being said, any combination of C or S or either one alone is really about the same thing. You are just fine tuning and taking a guess on whether smaller stocks will outperform larger ones. One may outperform the other by 1 or 2 percent, but in the end, who knows which. My point is, the important thing is to invest. How much is between C and S is a decision that one should not lose sleep over.

  34. Hi rich I’m 31 years old and had my money in the L2050 but decided to distribute my contributions to 10% F, 55% C, 25% S, 10% I, do you think it’s a smart move? I’m trying to go for a more aggressive but not to aggressive move.

    • Seems good to me. I can’t advise on stuff like that since I’m not licensed, but that would be a more agressive portfolio and is in line with what I’m doing. Keep in mind, if you can make money faster, that also means you lose money faster. Make sure you have the stomach for it!

  35. Hello Rich,

    You have successfully and amazingly aggregated a bunch of amazing information with really thoughtful and personal analysis by yourself. I think we all really appreciate it.

    Just one comment: This might be too off the wall for your blog, but I wonder if it’s worth mentioning the relationship between the treasury department, congress, and the G fund (listed as a con). There’s a great deal of history indicating that the G fund is not safe from temporary grabs by the Treasury Department as a stopgap to avoid the debt ceiling.

    With the large amount of debt assumed by the federal government related to the global pandemic and associated things, I’m not sure if I will ever feel comfortably placing any of my TSP funds in G fund. I’m currently at 80/20 C/S 7 years into my career, and will most likely add some F funds as I closer to retirement. But that G fund seems scary (even though the treasury department has always paid the G fund back). Just a thought. Love your blog!

  36. I’m dont plan on touching it too soon after retirement. My concern is the market right now. It took a dip back when the Pandemic first hit but i did get back most of what I lost during that time. I was just thinking that with me being 2yrs away from retirement I should try to protect what I have from big hits.

  37. I am 33 years old. I have had my investment in L-2050 fund since it was available. I am thinking of investing outside the L-funds and choosing 80-C, 20-S or another percentage which has more risk. Your thoughts on leaving life cycle finds? I wish TSP invested in Chinese markets and other international areas, if they did I would be inclined more in the I fund. At this time I don’t see the benefit of the I fund.

    • I also don’t see the benefit of the I fund. Leaving the L fund is higher risk, as it’s not progressively buying you more I and G as time goes on. That works for me, but doesn’t work for everyone.


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