The Thrift Savings Plan: A Strategy For 2021

Last week, I wrote about what I think are the foundations of military wealth-building. Following that, I can’t think of a better way to kick off the second edition of the Military Wealth Builders blog than by talking about the #1 most asked question on military finance forums and Facebook groups:

There are as many different answers to that question as there are financial experts out there. As one example, Dave Ramsey has stuck by his 60/20/20 rule for TSP recommendations for literally years: Invest 15% of your income every year, and make sure at least 5% of that (for those enrolled in the Blended Retirement System) is in TSP. Of that 5–15%, Dave says to put 60% in the C fund, 20% in the S fund and 20% in the I fund. Others recommend 100% in the C fund, to replicate the performance of a Vanguard or Schwab-style Total Stock index fund (but with even lower fees).

There are people who even try to use TSP to “time the market” and when they feel a downturn a’comin’, they move EVERY PENNY over to the G fund to minimize loss, then when they feel that the market is swinging back to the positive side, they return to their previous C/S/I allocations.

(As a side note, it’s worth mentioning that very few financial advisors recommend being in a TSP Lifecycle Fund. The simple reason is that they are far too conservative and the…