Thirft Savings Plan (TSP) is for federal employees. The plan concsists of 6 funds. Please refer to this page for the fund description.
Since all of the funds are separately managed accounts, We use benchmark funds as proxies for candidate funds. The L funds, Lifecycle fund, are not used in this plan.
The G fund is a stand out fixed income fund that has had outstanding performance. Based on the description on this page, "The G Fund interest rate calculation is based on the weighted average yield of all outstanding Treasury notes and bonds with 4 or more years to maturity. As a result, participants who invest in the G Fund are rewarded with a long-term rate on what is essentially a short-term security. Generally, long-term interest rates are higher than short-term rates.' The key here is the 'short term security' with long term interest rate. Talk about the advantage of being employed by the federal government!
In MyPlanIQ, G Fund is modeled as money market fund (i.e. its NAV is always 1) with yields calculated as (5 year treasury yield+ 10 year treasury yield)/2. It has a sepcial designated symbol 'TSPGFUND'.
Based on one of our users, TSP allows 2 times of rebalances per month.
I took out the LifeCycle funds for more targeted asset allocation recommendations.
Investment options of rcstonermdaf Federal Employee Thrift Savings Plan
Investment model portfolios
We provide two types of investment model portfolios for rcstonermdaf Federal Employee Thrift Savings Plan participants. You can customize and follow a model portfolio in your plan account.
Types of portfolio strategies
- Strategic asset allocation portfolio: It invests in a diversified portfolio of multiple assets, buy-and-hold without frequently changing the asset allocation weights.
- Suitable: For long-term (more than 15 years, preferably more than 20 years), want to be tax efficient and can withstand interim drawdown or loss as high as 50% or more.
- Pros:
- Less error-prone
- Infrequent rebalancing or transactions
- Tax efficient for taxable brokerage investments
- Cons:
- Interim loss or drawdown can be substantial
- Possible low returns for an extended period, such as 10 years or longer
- Tactical asset allocation portfolio: it invests in a diversified portfolio of multiple assets, dynamically adjust stock and bond allocations to minimize losses during market stress.
- Suitable: For long-term (more than 10 years or preferably longer) capital. Investors are willing to rebalance as frequent as monthly.
- Pros:
- Reduce large interim loss or drawdown
- Less sensitive to investment entry point
- Likely to improve returns
- Cons
- Demand more frequent rebalancing or transactions
- Less tax efficient — more suitable in a tax-deferred account such as 401(k) or IRA
- Can experience a period of lower returns compared to a broad-based strategic allocation or a buy-and-hold benchmark, especially in some bull markets
These portfolios are proactively monitored and rebalanced on a monthly basis when needed, ensuring it remains in line with its target allocation.
Let us know (Email us) if you need help to create a custom model portfolio for your plan.