The Thrift Savings Plan is one of your best options for long-term retirement investing, so consider taking full advantage of your TSP benefits throughout your military service.
Whether you are investing in the TSP or are considering investments beyond the TSP, here are some tips:
Don’t Ignore Fees
All investments have fees, and they vary from product to product and from firm to firm. Even small differences in these costs can significantly impact the growth of investments over time. Before investing, learn how fees and expenses affect your investment portfolio.
Diversification is Important
By picking a mix of investments, you may be able to limit your losses and reduce the ups and downs of your returns without sacrificing much in potential gains. Mutual funds, Exchange Traded Funds (ETFs), and lifecycle funds can help you diversify since these are investments that invest in a variety of stocks, bonds, other securities or assets.
Invest Throughout Your Career
Say your goal is to save $500,000 for retirement by age 65 -- by starting at age 25 and investing in the TSP or a mutual fund averaging 7 percent a year, you’d only have to contribute a little more than $200 per month. If, however, you didn’t begin saving until age 50, you’d have to save more than $1,600 per month, nearly 8 times the amount, to reach your goal by age 65. The bottom line - start investing now – even if in small amounts!