Simplify your Investment Choices: Part II

My last post highlighted a simple porfolio of mutual funds that you could use to diversify your investments and leave them alone.

Can you do this with your TSP account? Absolutely. Here's how I've allocated mine:

C Fund: Mirrors the S&P 500 (40%)
S Fund: Small and Mid-sized Company Fund (30%)
I Fund: International Fund (30%)

F and G: Fixed income and Government Secured Funds: 0% as long as you are on active duty.

RATIONAL: Between ages 18 and 45, I believe that you need to invest for long term growth. There aren't many places that are better for that than investing in global stocks in the Thrift Savings Plan. Since you aren't planning to touch the money until you're 59 1/2 (you aren't, are you?) you have at least 10 years to park the money before you need it.

I've set up my account so my contributions are added in those rations, and then I rebalance my account in the month that I joined the service. If you forget, just look at your Leave and Earnings Statement. When the "Years of Service" number changes, log in to your TSP account and do an adjustment.

Eventually you might decide to add some different funds, but I'd recommend that you wait until you leave the military. Roll the TSP into a self directed IRA account, and give yourself lots of flexibility. By then you'll have enough cash to hire a financial advisor who can optimize your fortune!