When your beneficiary participant account is first established, its balance is no longer invested according to any previously selected investment allocation. Instead, the entire balance is invested in the Lifecycle (L) Fund targeted most closely to the year you turn 62 (or the L Income Fund if you are age 62 or older). This investment remains in place unless you make an interfund transfer.
The TSP offers you two approaches to investing your money:
The L Funds — These are “lifecycle” funds that are invested according to a professionally designed mix of stocks, bonds, and Government securities. You select your L Fund based on your “time horizon,” the future date at which you plan to start withdrawing your money. Depending on your plans, this may be right away or some time in the future.
Individual Funds — You can make your own decisions about your investment mix by choosing from any or all of the individual TSP investment funds (G, F, C, S, and I Funds).
Choosing how to invest your account is completely up to you. You may invest in any fund or combination of funds. Note: Because the L Funds are already made up of the five individual funds, you may be duplicating your investments if you invest simultaneously in an L Fund and the individual TSP funds.