confused on exactly what the investment options are inside the tsp stick around I'm going to explain all of them welcome back F zonian today I'm talking to you live from the beautiful Sea Island in southern Georgia many of you are familiar with this area especially if you ever went to fety I'm down here for a week passing my days losing golf balls shooting clay pigeons and flirting with heat stroke the good news is this time I don't have to eat at the py chow hall there's a lot better options here available at the resort not going to waste any more time we'll get right into it we're going to talk about the five funds available your five investment options when you put money into your tsp every pay period they are in order of most conservative to most risky g f c s and I today we're going to focus Fus just on the G we'll do one video for each fund today we're going to talk about the original the G fund this started in April 1st of 1987 so it's the original fund inside the tsp it's the original and it's the G so you could call it the OG my kids are going to hate that joke since it came out in 1987 it's averaged 4.6% a year so the average annual return has been 4 .6% over the last 37 years that may surprise some of you some of you may think it's lower than that and if you've only been looking at the tsp for the last 10 years or so uh it has been quite lower sometimes less than 1% in a year but the average longterm has been over 4% last year was a little over 4% this year we are going to be maybe not quite 4.6 but over 4% between 4 and 4 and 1/2% which leads me to one of my first points I see this all the time in the tsp Facebook pages the G fund does not keep up with inflation I see that you probably heard that that's simply not true long-term inflation between 2 and 3% depending on what time frame you're looking at G fund has averaged 4.6 so it actually does beat inflation over the long term out of the 37 years I think it lost to inflation maybe seven or eight times uh but most of the times it it beats it and you know beats it by 50% or sometimes 100% so over the long term it does in fact beat inflation so what exactly is in the G fund when you're putting your money in there what are you purchasing well you're actually buying specially created treasury bonds that are unique to the tsp So when you buy a a bond you're loaning uh an entity money in this case you're loaning the federal government money and you you may have heard treasury bonds there's 2ye 5e 10e yields 30-year treasury bonds these are specially created treasury bonds made just for the tsp from the government so when you invest in that you are investing in government issued Securities there are a couple of things that are really unique about the G fund compared to the other Investments inside the tsp one is that it is the only fund not available in the private sector everything else in the tsp is available at Charles Schwab Merill Lynch Vanguard Fidelity Edward Jones you know your choice of investment professional you can buy the equivalent of the C fund the S fund and so on the Gund you cannot buy outside of the tsp it is unique only to the tsp these treasury bonds that I talked about were created just for the tsp so there is no exact duplicate of this in the private sector that's number one number two is the G fund is also the only investment guaranteed to not lose money everything else in the tsp can and and has at some point or another lost money the Gund cannot lose money it's guaranteed not to lose money every single day these unique treasury Bonds mature normally bonds are for a duration of a period of time 2 years 5 years 10 years whatever our treasury bonds for the tsp mature every single day they're 100% liquid every day the share price of the G fund actually goes up as they attribute the tiny little bit of interest to your account so each day the share price actually hits an all-time high because a a penny or a fraction of a penny or a couple of pennies gets attributed to the the share price every single day so those are a couple things that make the Gund unique not available in the private sector and uh guaranteed not to lose money the corollary to that it's also guaranteed to not make you a ton of money which is okay because that's not really what it's designed for the G fund is designed not to make you a ton of money it's not for wealth creation it's for wealth preservation so the purpose of the Gund is really to protect the money that you've already made if you're 25 years old I don't really know why you would want to be in the Gund you're there for the long term you want to you can afford to be more aggressive you can go after stock market returns that we'll talk about in future videos so I don't know if the Gund is really for an individual starting their career in their 20s or 30s I do a little exercise in each one of my retirement seminars where we take two employees and we go back 25 years and we say okay they're both hired in 1999 one stays in the G fund their entire career one stays in the C fund their entire career using actual numbers today in 2024 the one that stayed in the G fund their entire career would have about half a million dollars in there those are using real returns from the G fund over the last 25 years not bad half a million bucks how however the CF fund employee the person that stayed in the seaf fund the entire time for 25 years never got in and out would have 1.1 million so half a million versus 1.1 so while it is true that you can't lose money by being in a g fund that's not exactly the same thing as saying you can't lose out on money and in that situation using that example the one employee missed out on $600,000 by staying in the G fund their whole career so the G fund is not primarily for someone trying to create wealth someone that's Young starting out in their career but by the same token a 55-year-old might want to start considering being in the G fund if there aren't already you don't want to be 100% in the market in your 50s or 60s right before you start using some of your money uh and then there happens to be a a bad stock market crash or something and you lose 30% and the market stays down for years which has happened so again the G fund is designed for someone that is trying to preserve some of the money that they've already made in most people's investing career you have essentially two phases an accumulation phase where you're trying to just build as much as possible you can be aggressive you can afford to you have a longer investment Horizon and then you move into your preservation phase where you're trying to protect the capital that you've made uh some people would argue that there's also a draw down phase but I would that into the preservation phase because you're still trying to preserve your money in a systematic way as you start to withdraw so I said there's really no private sector equivalent of the G fund but in each one of these videos I'm going to try to give you some sort of way to replicate it in the private sector if you wanted to do this in the G fund then what you're looking for is basically something that is highly liquid that is relatively stable Andor guaranteed and pays some somewhere around 4 to 5% so what exactly is that pretty much a high yield savings account that's what we're talking about or money market that performs the same function as the G fund may not be 100% guaranteed by the government like the Gund but the GF fund is essentially the government's version of a high yield savings account today in 2024 there's a lot of people out looking for high yield savings accounts because finally as interest rates go back to more of a normal average we are starting to get paid interest on our deposits in Banks and stuff so high yield savings account is basically what the G fund is looking for that in the private sector you're looking for a high yield money market maybe a Government Bond Fund but something that is very liquid that pays between four and 5% a year in interest so in summary Gund oldest original tsp fund been around since 1987 averaged 4.6% a year over the last 37 years only fund not available in the private sector only fund guaranteed not to lose money and the purpose of the G fund is not to build wealth but to preserve wealth all right guys that's pretty much the G fund next video up in the series we'll talk about the F fund that's our other Bond Fund in the tsp we'll talk about that like subscribe comment below in the video any comments you have on the G fund whether or not you're in it what you think about it if you learn something new also put in your comment what's your favorite restaurant in St Simons crab daddy Southern Soul Barbecue what do you like best let me know until next time take care of each other and feed that tsp [Music]