(This article by Kimberly Lankford originally appeared in the March 2025 issue of Military Officer, a magazine available to all MOAA Premium and Life members. Learn more about the magazine here; learn more about joining MOAA here.)

The Thrift Savings Plan (TSP) has long been known as a low-cost way to save for retirement in a tax-advantaged account, offering investing options that aren’t available anywhere else. Recent changes make it even better.

Here’s how to make the most of the TSP investments and how to build your portfolio.

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The TSP includes three funds that invest in stocks and two that focus on fixed-income investments:

• C Fund: Large-company stock index fund, designed to match the performance of the S&P 500 index
• S Fund: Small-company stock index fund
• I Fund: International stock index fund
• F Fund: Fixed-income index fund, tracking the Bloomberg U.S. aggregate bond index
• G Fund: Government securities investment fund

The TSP also offers lifecycle funds (L Funds) that create portfolios of the five funds based on your investing time horizon, in five-year increments. The investments are automatically shifted as your withdrawal date gets closer.

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Changes and Options

“The TSP makes things easy, and the descriptions are pretty true to form,” said Lt. Col. Patrick Beagle, USMC (Ret), CFP®, owner of WealthCrest Financial Services in Springfield, Va. “With the recent revamp of the index tracking in the I Fund, it has improved even more.”

In the past, the I Fund invested only in companies from developed countries, but the benchmark changed in 2024 to add developing economies, too.

“Now it includes emerging markets, which is an important part of a diversified portfolio,” said Lt. Col. Amy King, USA (Ret), CFP®, Instar Financial Planning in Fallston, Md.

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One special TSP option is the G Fund.

“The G Fund is unique,” said Col. Curt Sheldon, USAF (Ret), CFP®, in Alexandria, Va., and a MOAA Life member. “The fund buys government bonds
that are only issued to TSP.”

The G Fund tends to have higher yields than stable value funds offered by other employer plans because it can invest in longer-term bonds, King said.

Even though the G Fund can be a good place to invest the cash portion of your portfolio, King warns against keeping too much long-term money there, which might not keep up with inflation.

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How to Create a Portfolio 

When deciding how much to invest in the TSP funds, consider when you need the money.

“It’s all based on your investment time horizon, risk tolerance, financial goals, and cash flow needs,” said King.

If you won’t need the money for a long time, she recommends investing most in the stock funds, but keeping some in the F Fund and G Fund, too.

“Diversification is really key,” King said.

If you receive military retirement pay, you may feel comfortable investing more aggressively, said Beagle. With that steady income, you can ride out downturns in a market and take “more risk for potentially more gain in the longer term,” he said.

The L Fund makes these moves automatically. Choose a date closest to when you plan to withdraw the money, and the fund gradually shifts the investments. The TSP L Funds tend to be more conservative than other target-date funds, but you can choose a later target date if you want more stock funds for longer, said Beagle.

Kimberly Lankford is a financial expert in Virginia and spouse of a retired Army colonel.