Monthly allocations vs. fixed allocations .. a comparison

For most Thrift Savings Plan investors, or participants, the investing, or allocation strategy is fixed.  A certain percentage of money in each fund, or particular funds are chosen, and then the money is left there for some long period of time. Another strategy is to move the money allocations on a more frequent basis, such as every month.

The TSP allows moving money twice a month between any funds, and a third time only to the G Fund.  So it isn’t practical to move the money more than once a month on a regular basis.

For the fixed-percentage investment strategy the effort is easy. Move money between the funds once, and then occasionally re-balance the funds to keep the percentages even.  There are various strategies to choose from: choose your own percentages, rely on a financial planner’s advice, or utilize the Lifetime funds that TSP offers.

The monthly allocations require a little more work – the funds are moved once a month. However this requires about 5 minutes of time online – a minimal effort. And if chosen properly this strategy can take advantage of times when the stock markets are gaining, and avoid losses during times when stock market is losing money. There again are various ways to do this – pick the percentages yourself, or get advice from a financial adviser.

There are many advisers and plenty of ones offering TSP advice – TSPinvestor is one option. TSPinvestor is an adviser and offers the Basic and Plus strategies. For now, these strategies are offered for free while they are proven to work.

The utilization of the fixed percentage will gain between 3% and 9% annual interest, depending upon which funds are picked.  The TSPinvestor Basic is projected to gain 12% annually; the TSPinvestor Plus is projected to gain 19% annually.