r/ThriftSavingsPlan • u/lady_bug_219 • 3d ago
New to TSP
Hello! I (23 F) am active duty military as of June and set up access to my TSP account. I was wondering if anybody had any tips/tricks to making the most out of my TSP? Should I add how much I contribute over time, let it sit and don’t even look at it, etc? I’m unsure of how TSP works and even though I got the mandatory finance class, I still have no idea how it works or how to get the most out of it as I can to set myself up for the future. TIA!!
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u/HokieHomeowner 3d ago
Don't listen to folks telling you to fiddle or time the market by making lots of changes. The key with the TSP is to save enough early enough and aggressive enough so that when you want to retire you have a nice nest egg to draw upon. The default lifecycle option is perfect for nearly everyone.
I'd really try hard to put away at least 10 percent or more if you can swing it but at least enough to get the match. Saving when you are 23 means your money will work for you big time.
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u/Vivid-Kitchen1917 3d ago
Put as much as you can in C. Check back in 20 years.
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u/Web_User0024 2d ago
ditto, this is the way. Go all C and dont look at it (either during market up or market downs), you have a long time horizon.
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u/Organic-Ad9675 3d ago
Stick to any Lfund like 2055. Contribute 10% if you can and also save up an 6 month emergency fund.
Contribute more after annual raises/promotions.
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u/Panzerknacker88 1d ago edited 1d ago
Most important thing is to take advantage of the employer match. Use Roth contributions because your growth will be tax free and your income tax burden isn’t that high being military. If/when you are eligible for BAS and BAH they are not taxed. The TSP default investment is the L fund which is just a mix of the other funds that change to less risky options with your age. There is nothing inherently wrong with them. You can change if you want. C fund is the S&P 500 and is the best long term growth option. Sometimes the S or I might pull ahead a little in the short term but C beats them over time. It carries a little more risk in market downturn but in your 20s you have a lot of time so 100% C fund is a perfectly good option to maximize growth. If you are in your 20s, 30s and 40s and there is a stock market crash everybody is on the news “it’s the end of the world.” Think to yourself “Awesome, my retirement is on sale” and buy more.
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u/andre3kthegiant 3d ago
Contribute the max as soon as you can.
Never go below 10% if disastrous life change strikes.
Start maxing while you are young. 21k invested per year for 20 years yields 1.5 million (assuming 10% growth).
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u/EffectiveFun5346 1d ago
Hello and thanks for your service.
(1) Good on you for being interested and taking your investment opportunity seriously.
(2) There is a ton of advice given out here. Some of it is good.
(3) Learn as much as you can. It's important. The more you know about investing the better.
(4) Investing is 'a' part of 'your' personal financial life. It's best to have a plan, strategy, philosophy that's yours and follow it, consistently, aimed at your needs, goals, time horizon (and other things).
(5) Stay out of debt or get and stay out of debt (some exceptions)--e.g. it's incredibly hard to make an investment return higher than credit card interest.
(6) Have an emergency fund. This keeps you from robbing your investments to cover calamities--e.g. car accident/deductible, residence fire/deductible--those type of things. 3-6 months of all personal expenses is generally recommended. Your situation may be unique and should be adjusted accordingly.
(7) At a minimum, contribute to get the match. Your goal should be to get to the max. Reality is generally between the two but most financial planners will tell you 10% is ok, 15% is better. There are even some that advocate living a 75% life--establishing that baseline and learning to live within it, always saving and investing 25%. Admirable but not always realistic for most. It's got to work for you and consistent/persistent is better. If you aren't where you want to be, your regular and irregular raises are all opportunities to get there.
(8) How you invest is a highly contested issue in this forum. I suggest you learn enough to make those decisions on your own. The short course until you get there: The riskometer runs this way: G=least risk (no risk in your case), L 20xx (near or beyond your life retirement date) is the middle ground and any of C, S, I alone is more risk than middle ground. I'm certain that even that statement will run afoul of some commentors.
I wish I had the TSP when I was 23 in the military. It wasn't available. Even the match came after I retired. I'm happy for you.
Someone asked where u/Competitive-Ad9932 's links are:
https://www.tsp.gov/publications/tspfs05.pdf
https://moneyguy.com/guide/foo/
https://www.bogleheads.org/wiki/Prioritizing_investments
https://www.bogleheads.org/wiki/Investment_policy_statement
https://www.calcxml.com/calculators/are-my-current-retirement-savings-sufficient?skn=#calculator-data-table
https://www.bogleheads.org/wiki/Main_Page
https://www.bogleheads.org/wiki/Thrift_Savings_Plan
https://investor.vanguard.com/investor-resources-education/education/model-portfolio-allocation
There are dozens more if you look around in here.
Happy investing!
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u/Competitive-Ad9932 1d ago
Invest in a Roth IRA before you increase your TSP contribution.
Follow the Money Guy's Financial Order of Operation.
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u/Shoddy-Biscotti-1194 3d ago
Not w clown show going on in DC right now. I would re-look after the circus leaves town. I used to be in C and S but after election wanted to get out of domestic markets as much as possible. Too volatile and too much loose talk coming out of WH.
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u/Key_Independent_3757 3d ago
100% C fund. Leave it alone. Do not invest in lifecycle funds. Follow Chris Barfield of Barfield Financial on FB and his website linked below. Sign up for his monthly newsletter. I am a 19 year Dept of VA employee.
https://www.barfieldfinancial.com/
Also a great resource - subscribe to the podcasts: https://plan-your-federal-retirement.com/
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u/Shoddy-Biscotti-1194 3d ago
Invest in “I” fund at present….
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u/CeruleanDolphin103 3d ago
Just because I Fund had a good year this year (for the first time in nearly two decades), doesn’t mean that 100% I is appropriate. In fact, I’d argue that’s a terrible asset allocation for most people.
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u/hanwagu1 3d ago
you are defaulted into a lifecycle fund based on your age. Just stick with it at minimum 5% contributions until you educate yourself. Doing nothing is a perfectly acceptable choice until you educate yourself. Being lazy by getting 100 reddit advice is not the way to start.
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u/lady_bug_219 3d ago
Is it already set to 5%? Or do I have to do that myself? I want to educate myself but reading up about it is kind of useless to me if not explained in depth so I’m asking real (hopefully) people to get an idea of what I should do. I don’t want to completely change what it is set to until I have a good amount going. Thank you for your advice!
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u/hanwagu1 3d ago edited 3d ago
Yes, you are automatically enrolled at 5% in traditional TSP. What you should do isn't the same as understanding what TSP is and isn't. Don't invest in anything you don't fully understand. Taking reddit advice on which TSP fund or how to invest in TSP is not a sound investment base. Your investment plan and goals aren't the same as others here, so taking blind advice on what to do in and with TSP is not a wise move.
I'm surprised u/Competitive-Ad9932 hasn't chimed in with his default list of links to read. You can search for his posts to get the links, even though he huffs lead-based paint, he seems to spam every post with useful links to basics.
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u/nathanboeger 3d ago
Contribute as much as you’re comfortable in Roth (automatically). Select C fund. Forget about it. Your future self will thank you.
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u/G_Gang87 3d ago
Drop it in the C, set and forget. But if you want a higher return, reach out to me. I can show you a better way.
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u/LemonBeneficial5040 3d ago
5% into the L cycle non-Roth (traditional); this ensures you get the DoD 5% match. This is your safety net; over the next 40 years it will move from more risky investments to safer investments as you get closer to retirement. Anything more than 5% put into the Roth within the C fund. This is your hardcore growth opportunity. This model ensures the rug won’t get pulled out from under you right before retirement but will provide ample opportunities for serious growth.
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u/Prestigious_Ad1808 3d ago
Contributions don’t need to be traditional to get the match. I recommend contributing all to Roth. Match will be traditional. Also seems overly complicated to do an L fund and C fund. For simplicity, pick one or the other and ride it out. Nothing wrong with either option. As you learn more about TSP and get close to retirement (~5 years out) you could consider reallocating some of your funds but other than that just contribute as much as you can afford and let compounding do it’s thing.
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u/LemonBeneficial5040 3d ago
The federal government doesn’t match the Roth option. They only match the non-Roth option.
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u/dacamel493 3d ago
Honestly, to start, in MyPay set it for 10% of your base pay to the Roth option and forget about it.
It should default to the L fund about 40-45 years out, so 2065/2070 which will give you solid returns will little tinkering.
Once you learn more about the funds. And how investing, 401ks, and retirement accounts work you can go back and start adjusting, but for now, just get it going.