Is The G Fund Right For You? | Plan Your Federal Benefits (2024)

FAQs

Should I keep my money in the G fund? ›

For all practical purposes, this makes TSP G Fund like a stable-value fund or a supercharged money market fund: Investors can generally expect the G Fund to never lose money and to pay a modest yield over time.

Payment of principal and interest is guaranteed by the U.S. government. Thus, there is no “credit risk.” Although the securities in the G Fund earn a long-term interest rate, the Board's investment in the G Fund is redeemable on any business day with no risk to principal.

In periods of falling interest rates, the F Fund will experience gains from the resulting rise in bond prices. So in the long run, you may expect F Fund returns to exceed those of the G Fund; however, you should also expect greater price volatility (up and down movements).

The conservative funds are the G and F funds and the aggressive funds are the C, S, and I funds.

G Fund Returns

The G Fund has earned a compound annualized return of 4.2% since August 1990. Its year-to-date return is 1.63%, and its 1-year return is 4.41%. A $1,000 investment in 1990 would be worth $4,060 today.

The G Fund is often considered the safest option among TSP funds. It invests in U.S. Treasury securities, providing a stable return with minimal risk.

Government money market funds invest only in assets backed by the federal government—for example, Treasury bonds. Because of this government backing, they're considered the safest and most liquid type of money market fund.

Treasuries are generally considered"risk-free" since the federal government guarantees them and has never (yet) defaulted. These government bonds are often best for investors seeking a safe haven for their money, particularly during volatile market periods.

Although the securities in the G Fund earn a long-term interest rate, the Board's investment in the G Fund is redeemable on any business day with no risk to principal. The value of G Fund securities does not fluctuate; only the interest rate changes.

What fund has the highest return? ›

The C Fund has grown 7.49% in 2024, marking the best performance among the TSP's core funds. The small- and mid-size businesses of the S Fund posted the strongest numbers in February, gaining 6.03%. That's good enough to bring the fund 3.48% into the black in 2024.

Even in today's inflationary times, the word millionaire has a certain cachet. With a little self discipline and the power of compound interest, millionaire status is available to federal employees who make wise use of the Thrift Savings Plan.

According to the latest figures from the Federal Retirement Thrift Investment Board (FRTIB), the agency that oversees the Thrift Savings Plan (TSP), there are now 116,827 TSP millionaires as of the end of December 31, 2023. At the end of 2022, there were 76,889, which is a 52% increase in one year.

There's a one-word answer to that question: More! There is no such thing as too much money in the Thrift Savings Plan. If you want your TSP balance to be able to generate an inflation-indexed annual income of $10,000, most financial planners will suggest that you have a $250,000 balance at the time you retire.

While money market funds aren't ideal for long-term investing due to their low returns and lack of capital appreciation, they offer a stable, secure investment option for individuals looking to invest for the short term.

"There have been 36 years of annual G Fund returns so far (1987-2022). The G Fund has a pretty good record vs inflation. 30 Wins and 6 Loses. The vast majority of time (83%), the G Fund wins.

Your best bet is to stick with the C, S and I Funds. Here's the ratio we recommend for your portfolio: 80% in the C Fund, which is tied to the performance of the S&P 500. 10% in the S Fund, which includes stocks from small- to mid-sized companies that offer high risk and high return.