OK, here's the deal - the last of our 4 children graduated from college in May (yea!) and got a full-time job on Capitol Hill last month (double yea!!); now all 4 have full-time jobs (triple yea!!!).
Child 4 now participates in the federal thrift savings plan (TSP) - came to me for advice, and I thought a good starting point is to put 3% of the starting salary into the TSP to begin with (already being taken out). Then, with each of the next couple of raises, to increase the individual contribution until it reaches the maximum match percentage - which I believe is a total of 10% of salary (individual contribution + the federal match).
Anyway, here is what I am thinking:
Child 4 now participates in the federal thrift savings plan (TSP) - came to me for advice, and I thought a good starting point is to put 3% of the starting salary into the TSP to begin with (already being taken out). Then, with each of the next couple of raises, to increase the individual contribution until it reaches the maximum match percentage - which I believe is a total of 10% of salary (individual contribution + the federal match).
Anyway, here is what I am thinking:
- Currently, all contributions are being put into the G Fund - which is the default fund. This will change once we figure out where we want future contributions to go.
- Since Child 4 is young and right out of college, I think a reasonable beginning overall asset allocation would be 80% stock and 20% all other (bonds and money).
- In reviewing the TSP fund choices, all have low expenses (the info off of the TSP website is showing 0.025% for each fund as of 2010 - might be slightly different today, but still low).
- Do not plan on utilizing the L Fund, as I am not a fan of the lifestyle time horizon fund approach.
- Looking first at the non-stock 20% allocation, my first thought is to recommend equal amounts into the G Fund and F Fund - 10% each.
- For the stock 80% allocation, I am thinking to recommend 40% in the C Fund, 15% in the S Fund, and 25% in the I Fund.
- G Fund - Government securities specifically issued to the TSP
- F Fund - Government bonds and mortgage-back bonds (matches performance of Barclays Capital U.S. Aggregate Bond Index)
- C Fund - Large and medium-sized U.S. companies (matches performance of S&P 500 Index)
- S Fund - Small and medium-sized U.S. companies not in the C Fund (matches the performance of the Dow Jones U.S. Completion TSM Index)
- I Fund - International stocks of 21 developed countries (matches the performance of the Morgan Stanley Capital International EAFE Index - Europe, Australia/Asia, and Far East)