What is the Thrift Savings Plan?In simple terms, the TSP is the Federal Governments' version of a 401k plan.
What is a TSP?
In simple terms, the TSP is the Federal Governments’ version of a 401k plan.
It is a defined contribution plan where federal employees and military service members can contribute a percentage of their pay, on a tax deferred basis, and the government will match those contributions up to 5%. Investment options are very straightforward and include 3 stock funds, 1 bond fund, and a money market fund. Life Cycle funds are a combination of the 5 core TSP funds (think of them as a portfolio of all the TSP funds). They rebalance quarterly, decreasing your exposure to the stock funds as you progress toward retirement. We have more in-depth information about the Lifecycle Funds on our site.
One very important thing to understand about the TSP is that it is a retirement account, not a brokerage account. The Thrift Savings Plan is a vehicle designed to build wealth for retirement. It is not a “day trading” platform. You must treat the TSP like a marathon, not a sprint. Daily and weekly volatility are much less important than monthly and yearly performance.
Our mission at GrowMyTSP.com is to maximize our TSP account given the restrictions of the TSP rules, the TSP Funds available for us to trade, and the price movement of the market over time.
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