Even on credit cards, interest rates are only about 25% which is tiny compared to the 100% match. (Obviously in a perfect world, weвЂ™d want to invest and pay off debt). The match is so good that sometimes it makes sense to prioritize this match over paying off debt. If you are already investing, can you start contributing more every pay period? Not everyone can afford to, but if you can, hereвЂ™s another adage to keep in mind: What you donвЂ™t see, you wonвЂ™t miss. You can take the initiative and start investing into your TSP today. The hardest part is often simply setting it up. The same applies for exercise, nutrition, relationships, and yes, investing.Д«ut here is some good news: once you get it set up, it is easy to consistently invest in your TSP because it automatically comes out of your pay. It would not work if we decided weвЂ™d only brush our teeth for 2 hours once a quarter. It is most effective when we brush our teeth for just a couple of minutes every day. Anything that we do on a regular basis becomes a habit, and habits shape who we are and what our life looks like.ДЇor example, letвЂ™s take brushing your teeth.

Actually, in just about every area of life, consistency trumps all. Here are 3 things that TSP millionaires understand and do. One paycheck contribution at a time (dollar cost averaging). The good news for the rest of us is that the majority of these millionaires built their wealth the old fashion way. Some of those folks transferred a large percentage of their funds from previous 401(k) plans вЂ“ but not all, and most of those TSP millionaires have accounts going back nearly 30 years. As of the end of 2019, there were nearly 50,000 federal employees with at least $1,000,000 in their TSP. But as we all know, simple doesnвЂ™t always mean easy. Since that time, returns have been great, with the C and S funds up over 250% in that time.Д«ecoming a TSP millionaire is simple. The impact of this 1 day delay is already incorporated into these performance statistics.One of the worst things any investor can do is to buy high and sell low, something many federal employees did during the Great Recession as the market bottomed out вЂ“ guaranteeing to lock in losses and miss out on buying cheap. An investor following the TSP Folio strategy typically enters the rebalancing orders on the last business day of the month, after the market close, or on the next business day.However, in practice the difference is not significant, because the TSP funds have extremely low expense ratios (0.027% per year as of this writing). The indexes we use do not account for fund expenses, so earlier returns for both the benchmark portfolio and TSP Folio strategy will be slightly higher. The same was done for all other TSP funds and their underlying index. For example, for the TSP C Fund, we extended the available price history with the S&P 500 Total Return index. To allow for a longer performance comparison and backtest, we extended the available TSP fund price history with the underlying index data. TSP.gov has published monthly fund returns since inception, and daily fund price history since 2003. The first TSP fund became available to investors in April 1987, and others followed in 19.A good investment strategy aims to minimize drawdowns. Drawdown: the peak-to-trough decline in investment or portfolio value, measured as a percentage between the peak and the trough.When comparing portfolios, a high Sharpe Ratio is preferable. We use the TSP G Fund returns as our risk-free investment. It's calculated by subtracting the risk-free interest rate from the rate of return for a specific portfolio, and dividing the result by the standard deviation of the portfolio returns. The Sharpe Ratio measures risk-adjusted performance.When comparing investments, a low standard deviation is preferable. Volatile funds or portfolios have a high standard deviation. Standard deviation, also known as historical volatility, is used by investors as a gauge of the amount of expected portfolio volatility.TSP Folio is a dynamic allocation: the actual monthly exposure to stocks varies between 0% and 60%. We chose this benchmark portfolio because the historical average monthly stock allocation of the TSP Folio strategy is approximately 40%. The benchmark portfolio is an allocation to 40% stocks and 60% bonds, invested in TSP funds as follows: 20% C Fund, 20% I Fund, and 60% F Fund.

(Note that Allocations made within the past 3 months are only shown to current subscribers). Strategy performance is tracked and verified by. Performance results before this date represent a hypothetical strategy backtest.

The TSP Folio strategy was made available to subscribers on.

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