Are TSP plan participants allowed to select their own stocks? With a TSP plan, participants are not permitted to pick their own individual stocks, instead, they choose investment allocations from up to five different agency approved plans. These include U.S. treasury bonds, fixed income assets, international stocks, common stocks, and small capitalization stocks, each of which carries their own risks and rewards.

Fixed income index investments, known as F funds, are invested in high quality securities which track the LBA bond index, a group of U.S. government, mortgage, and corporate securities. F funds are similar to performance to the vanguard total bond market index fund, or VBMFX. With an F fund, TSP participants with low risk tolerance are able to avoid the stock market.

Government securities investments, or G funds, are invested in short term U.S. treasury securities or bonds, which are guaranteed by the federal government. These types of investments are unique in the sense that they are government securities backed by the full faith and credit of the U.S. Government, and are equivalent to high yield stable value funds, meaning that there is almost no risk of either loss of principal or investment.

Small capitalization stock investments or S funds are invested in a portfolio of stocks that replicate the performance of the Wilshire 4500 Index, and are the largest U.S. stocks, excluding stocks of the standard and poor, or S&P index.

International stock investments, or I funds, are invested in a portfolio of stocks that are designed to track the performance of an index representing international equity markets, mirroring the Morgan Stanley EAFE Index.

What are TSP lifecycle funds? Lifecycle funds were introduced into TSP plans in 2005, and are composed of percentages of the five selected funds based on the employees target retirement year. These types of funds are expected to be restructured in 2010, when the then L2010 fund will become similar to the current L Income fund, and a more aggressive L2050 is expected to be established.

TSP Retirement plans vary by employee classification, and by agency, so it is important to discuss your individual options with your human resources director, who can help you ensure that you are enrolled under the right TSP retirement plan, and work to help you develop an investment, contribution, and retirement strategy. Your personal financial planner will be able to provide you with valuable retirement planning information and advice as well.