TSP L Fund

An overview of The Thrift Savings Plan Lifecycle Fund

The L Fund is an investment option for a Thrift Savings Plan account holder. It is also know was a Lifecycle Fund, it allows for the professional selection of investment mixes. The L Fund automatically tailors the risk/return equation to cater to your needs over as years. It evolves with your lifetime. The strategy assumes that when you are younger risk is more acceptable. As you age and the target retirement date approaches, the TSP Lifecycle Fund's mix becomes more conservative.

The Investment Strategy

The TSP Lifecycle Fund invests in the five different types of TSP Funds. The mix of the G, F, C, S, and I Funds are invested in to span a particular time horizon or to meet a set retirement date. The longer until retirement, the more tolerable it is for your fund to accept risk in an effort to obtain higher rates of return. Given the structure of the five funds and a defined time horizon, an optimal mix exists to yield the highest return.

Risk

By investing in any 401(k) styled plan, risk is inherent. For the L Fund, the risk becomes those investment risks that come with the five Individual TSP Funds. The L Fund is not guaranteed to never see a loss. Since it is a collaboration of other funds that also are susceptible to risk it is only logical that there would be periods of loss and gain. The diversifying of the investment through five instead of one fund reduces the risk greatly.