The Thrift Savings Plan, or TSP, became available to military members more than a decade ago. It offers us the ability to save money before taxes come out, allowing the money to grow over time and then be taxed as ordinary income when we tap into it.
Most military members are not professional money managers, and you might be confused about the different investment options in the TSP. While there are just a few different options in the TSP it might still be a little overwhelming.
The TSP website offers a lot of general information that can help you make a decision over your investment mix. Too often, unfortunately, military members opt for either the safest possible fund, the “G-Fund” which is the default setting for contributions, or the fund that happens to have the highest rate of return when they sign up for the benefit.
As with picking mutual funds, sometimes the best choice is to get some help to pick the right funds for you. There are a couple of ways to get help. The first way is to go to your service’s support agency. The AIr Force Airmen and Family Readiness Center has personal financial management counselors who can explain the options and answer questions about the differences.
Another great option is Militaryonesource.com. You can use this service to get one-on-one counseling for all your financial concerns, including your TSP contribution choices.
A less attractive but very popular choice is asking your friends, family, or your supervisor how to invest your money. Like many gamblers, many of these individuals only recall their investment wins, avoiding or “forgetting” their investment mistakes.
A great choice is to hire a fee-only investment counselor to sit down with you and your spouse to discuss your entire financial situation. It’s really only in this holistic context that your TSP choices can be properly set. If you can afford a few dollars now, it has the potential of making a big difference in your eventual financial health.
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