Why you should get on this new TSP strategy ASAP!
Oh, the TSP. You either love it or you hate it. Or, if you're like most of us, you pay into it and don't really understand what's going on. Sure, we might know that the Thrift Savings Plan helps offer service members investment options to plan for retirement. But do you even know how to choose your investments? TSP choices range from short-term US Treasure securities to index funds, to domestic and international stocks. Don't forget TSP offers Lifecycle funds, too.
It's enough to make your head spin, right?
But don't worry.
As always, David Pere is here to help break it down for us. In this episode of From Military to Millionaire, we get a birds-eye view of the latest TSP development - Lifecycle Funds.
The Thrift Savings Plan has added new Lifecycle fund options. Lifecycle funds change your allocation of funds as you near your retirement date. As you get older, the fund automatically changes your investments to less risky ones. This is a good thing, as you take more risks earlier in life when it makes sense, and then later on, when you should be more focused on wealth preservation, risks drastically decrease.
Now, there are ten instead of five options, with withdrawal options every five years instead of just every 10 years. The result is that service members have better-allocated funds that are much more accurate to their retirement date.
Finally, to maximize your earning potential, set up your TSP immediately, putting in at least 20% of your paycheck. That way, it doesn’t feel like what you’re putting into the fund is money that you’re losing, as you never had that money to spend in the first place. And the more money you put in at an early age, the more your money will compound.
Ready to Find Out More?
David Pere is an active-duty Marine who is on a mission to educate the military community about financial readiness. Most people hear that term and roll their eyes, but Pere wants everyone to know that readiness can be achieved – without a lot of effort. He teaches personal finance and real estate investing to service members to help increase savings and increase their chances of achieving financial freedom.
Want to learn more about Pere? Check out the Military to Millionaire website, and connect with him on Instagram or Facebook. Subscribe to his YouTube channel here! Take a look at David's book – The No B.S. Guide to Military Life here.
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