There’s quite possibly nothing easier than using Safer 401(k) with your TSP account. Just type in the allocation once a month and you’re done!
Safer 401(k) gives you a PDF with an item called Your Allocation. It looks like this.
Your Allocation is how much of your portfolio you should invest in the “C Fund – Common Stock Index.” This is just another name for “S&P 500,” which is what the C Fund is tracking. They only call it something else because they don’t want to have to pay Standard and Poor’s (S&P) a licensing fee!
(Which shows you just how low-cost these funds are!)
The way you allocate the right amount of your portfolio to the C Fund is simply by clicking “Interfund Transfers,” then typing in Your Allocation. And if you’re working and actively contributing, then you’ll also want to go to “Contribution Allocations” and change that to the same thing.
E.g., if Your Allocation is 100%, you want 100% of your portfolio in the C Fund. If Your Allocation is 50%, then you want only 50% of your portfolio in the C Fund.
What about the other 50%, you ask? Well, that’s where you TSP folks are really lucky — the G Fund (Government Securities) is a very unique fund that allows you to get long-term bond rates without the risk of losing principal! (Usually, bond funds aren’t this safe.) This is sort of like a cash-equivalent, but even better. So whenever you’re not fully allocated to the S&P 500 (C Fund), consider placing your extra in the G Fund.
TSP account holders are allowed to re-allocate their portfolio with an “Interfund Transfer” twice a month, too, meaning that you won’t have any trouble keeping up with our once-monthly recommendation.
If you’re an aspiring retiree with a TSP account, we think you’re going to be really happy with the way Safer 401(k) and your TSP account are going to work together.
Learn more about the long-term performance of Safer 401(k) portfolios.
See how the “Risk Report” works.