Meet the New Leader of the TSP Fund

Meet the New Leader of the TSP Fund

As of July 2022, the C Fund is no more the biggest Thrift Saving Fund. Although it still sits in the top 5 core funds, the position of number 1 is now acquired by the G Fund. According to market performance, it can be approximated that the G Fund holds around $215-220 billion.

This rise in the position of the G Fund is primarily attributed to its non-volatile nature. While the other funds have lost considerable amounts in recent years, the G Fund remained secure. This is one of the prime purposes why investors may presumably target the G Fund. However, Dallen Haws, a financial planner, thinks otherwise.

Even though the TSP Fund website itself recommends investors to invest in the G Fund. The reason behind this suggestion is that the G Fund will protect funds against potential losses, inflation, or a sudden economic collapse. But the choice of retirement and the period until retirement may also impact the investing decisions of investors.

Dallen Haws claims that although the new shift has created an uproar, it is not as big of a topic as people have made it. The boost in the savings within the G Fund occurred only because of a simultaneous coincidence. Dallen Haws explained that at the same time other core funds began facing losses, investors poured their money into the G Fund. That is the reason behind the emergence of the G Fund as the new leader of the TSP Funds.

He also commented on the distinguishing and comparing factors of the C Fund and the G Fund to enlighten investors further. He says that since the G fund is a government bond fund, it has been backed up by the government. Thus, the government will make sure that the G Fund will under no circumstances lose money. While it provides the safety investors look for, there is also a red flag. On the other hand, the G Fund does not give out significant returns that would be expected of it.

Dallen concludes that the G Fund is an incredible place to hold your money for short-term money on which you are not expecting any growth. However, investors are most likely to demand growth in the long run. This is where the C Fund and other core funds step in. While the journey may be bumpy with these funds, the results are worth the ride.

He advises investors to be clear about when they will need their TSP money back. Simply put, if your target is to withdraw money in less than 5 years, then the G Fund is the perfect option. However, if you have long-term plans, the C Fund will give you the desired growth. People who fit in this category include those who have just started their careers, retirees who are saving for their kid’s future, and other people whose plans are not in the near future.

Thus it does not matter what inflation will be like or what economic conditions might prevail in recent years. All you have to do is mark a target period when you would require your money back and use the answer to that to make your investing decisions.