G and S Funds: The Yin and Yang of the Thrift Savings Plan

The G and S Funds: Part of the TSP Family

One of the most frequently voiced complaints about the Thrift Savings Plan (TSP) is the lack of variety within the allocation options it offers. However, the G and S Funds alone are very diverse investment vehicles.

G Fund Facts

Some G Fund basics1:

  1. The G stands for Government Securities Investment Fund
  2. Designed to stay ahead of inflation
  3. Comprised of short-term U.S. Treasury securities, but gets long-term interest rates
  4. Only available to those with TSP accounts
  5. Principal and interest are guaranteed by the Federal Government
  6. The interest rate gets readjusted every month, so if long-term interest rates go up, so do yours

S Fund Facts

Some S Fund basics5:

  1. The S stands for Small Cap Stock Index Investment
  2. Made up of small and medium-sized U.S. companies
  3. Principal and interest are not guaranteed
  4. The return is dictated by the market, not the government
  5. In bull markets, small-cap stocks generally exhibit the largest appreciation of the asset classes
  6. In bear markets, their slide is usually the worst

Investment Inertia: Couch Potato Investors

The G Fund seems to be a popular choice for TSP participants. As of June 2014, 35% of all TSP assets were in the G Fund2.

Participants in their 20’s have 48% of their retirement account in the G Fund. The TSP executive director deems this percentage an over-allocation, and believes it may be caused by inertia, since the G Fund is the default fund for new hires3.

To address this issue, Congress has moved forward to make the Lifecycle Funds the default for new hires instead4.

In general terms, it’s good to catch the wave of the S Fund, but having the G Fund in your portfolio may soften the crash onto the beach.

Your Personal Retirement Portfolio

The G and S Funds are just two of the five funds in the TSP. Depending on your risk tolerance and investment objectives, you may need to include other funds in your Thrift Savings Plan portfolio, or seek additional options outside of the TSP. To determine the investment balance that’s best for you, speak with a federal benefits specialist.

See If You Are Ready To Retire!

For over 30 years, federal employee retirement planning has been a key focus of Medallion Financial Group. We recognize that FERS retirement benefits have extra layers of complexity, such as the Thrift Savings Plan (TSP), 401K, Pension plan, FEGLI and more. It’s easy to get lost in a sea of bad advice when so few people understand the basics. We help with the basics and beyond to enable our clients to get the education and advice they need to retire with confidence.

Our focus is twofold: first and foremost, we are fiduciary advisors. We stand against any violation of laws, values, and ethics. Second, we treat our clients as part of our family, not only those who call Maryland and Georgia home, but clients across the US who have benefited from our reputation of personal service, integrity, and expertise.

We strive to exceed client’s expectations – because we have high expectations of ourselves.


1. “G Fund: Government Securities Investment Fund.” TSP.gov. N.p., n.d. Web. 17 Oct. 2014.

2. Vmance, ed. “Thrift Savings Fund Statistics.” Thrift Savings Fund Statistics (n.d.): n. pag. The Federal Retirement Thrift Investment Board. June 2014. Web. 17 Oct. 2014.

3. Moore, Jack. “TSP Seeks to Supplant G Fund in Automatic Enrollments.” – FederalNewsRadio.com. N.p., 16 Dec. 2013. Web. 17 Oct. 2014.

4. Katz, Eric. “Senate Approves Bill to Default New Hires Into Riskier, Higher Yielding TSP Fund.” Government Executive. N.p., 7 Sept. 2014. Web. 17 Oct. 2014.

5. “S Fund: Small Cap Stock Index Investment Fund.” TSP:. N.p., n.d. Web. 17 Oct. 2014.