Well it is official. The G fund is now the biggest fund amongst the 5 core TSP Funds.
And that is not a small feat as the C Fund (the next biggest fund) has over $200 billion invested in it.
And while we are still waiting for the exact numbers from the most recent TSP Investment board meeting, based on market performance, the G fund holds between $215-$220 billion.
But what does this mean for you? We’ll dive in below.
Why This Happened
There are two main reasons why the G fund is now on top.
The Other Funds are Struggling
All the other TSP funds (C, S, I, and F) have last money in 2022 while the G fund has had the inherent advantage of being guaranteed by the government. In other words, the G fund can’t lose money while all the other funds have gone down.
Therefore, just from market performance, the other funds’ sizes have wavered compared to the steady G fund.
People are Jumping Ship
The market volatility has got many people spooked and many are jumping out of the more aggressive stock funds (C, S, and I) in favor of the G fund’s safety.
So the other funds are not only losing value from recent market performance but also from individual federal employees moving their money out.
But what most of these federal employees don’t realize is that right now is one of the worst times to go to the G fund.
Big Opportunities Right Now
When the market struggles, there is always good news and bad news. The bad news is that it is painful to watch account balances fall.
The good news is that this is an incredible opportunity to set yourself up for the future.
Because when the market is down, you are able to invest at a huge discount. Think about it. The C fund has lost about 20% since January 2022 which means that you can buy significantly more shares in the C fund with the same TSP contribution as before.
While you are working, down markets are an incredibly powerful time to buy low so you can sell high later.
If you go all to the G fund right now, that is doing the exact opposite: buying high and selling low. Overtime, this strategy is detrimental to how much money you’ll have by retirement.
But I’m Close to or Already Retired!!
But what if you are close to retirement and you don’t have much more time to “buy low” by putting new money into your TSP?
For those close to or already retired, it is even more important to buy low and sell high and you need an investment strategy to allow you to do that for the rest of your life.
Here is strategy on how you can keep your hard-earned money working hard for you even once you’ve retired.
