Keyboard Ninja
Recycles dryer sheets
- Joined
- Apr 13, 2008
- Messages
- 157
I'm bored at my volunteer duty and decided to look for some nformation about the TSP "G" fund:
Would it help to diversify myself by buying "long-term" bonds? Or would that not even matter. I'm not purchasing any until I max out my TSP, but I figured I would ask anyways.
[FONT=Georgia, Times New Roman, Times, serif]G-Fund[/FONT]
[FONT=Georgia, Times New Roman, Times, serif]The G-Fund is the safest investment option in the TSP family of funds. An investment in the G-Fund is very similar to investing in Certificates of Deposits (CDs) at your local bank or having your money in a money market account. The most important thing to know about the G-Fund is it invests in short term government bonds. Therefore, your investment, both principal and interest in this fund is guaranteed by the U.S. Government. This is the only TSP fund with a guarantee that you will not lose money. [/FONT]
[FONT=Georgia, Times New Roman, Times, serif]Investment:
The G-Fund invests in US Treasury securities (short-duration government issued bonds) with a maturity of 1-4 days, yet its returns equivalent to longer-maturity (4 years or more) Treasury securities. Normally in the bond world, the longer the maturity, the higher the interest rates. So, this arrangement of short duration with higher interest rates is a really great deal for us G-Fund investors because we get the higher returns associated with the longer maturity bonds, but because of the short maturity of the G-Fund securities the G-Fund has no interest-rate risk. Interest rate risk, a risk you incur when you invest in the F-Fund or any other bond fund for that matter, results from the fact that rise in interest rates causes the value of bonds to decrease. Think of the G-Fund as a savings account that earns 4% a year.[/FONT]
Would it help to diversify myself by buying "long-term" bonds? Or would that not even matter. I'm not purchasing any until I max out my TSP, but I figured I would ask anyways.