Do you know you have to save for retirement but are intimidated by the whole process? Do you wish you could just give your money to someone and they would invest it for you? If this is you, then don't worry about it and know you're not alone. The Thrift Savings Plan, and other corporate banks, have mutual fund options for you that mimic having someone invest for you. In the Thrift Savings Plan you have the Lifecycle Funds.
The Lifecycle fund automatically invests using the strategy of taking more risk while you're younger and less risk as you get older. Each year that you get closer to the target retirement date, your fund will automatically "reallocate" your money to safer investments. Anytime you set up your TSP in MyPay, the default fund is the "G" fund. You must log onto www.tsp.gov and change your allocation to one of the Lifecycle funds.
There is the L Fund Income, 2020, 2030, 2040 and the 2050. The goal is to pick a fund that's closest to your retirement date and choose that. The income is reserved for people already in retirement, 2020 will be for those getting close to retirement in the next 7 - 10 years and so on until the 2050.
Corporate banks have similar funds called "Target" funds. They have target dates just the way the TSP does.
All investments carry risk with them. The risk of investing in Lifecycle funds is that the variable they invest with is risk-to-age models. This risk may put someone at the risk of unpredictable changes in the market that some people would like to avoid or to take advantage of. These funds take away the flexibility of active management. As with all TSP funds, you can sell in and out of the funds so you can stay in the Lifecycle funds for as long as you're comfortable and then switch to avoid or take advantage of market patterns.
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