Invest in all TSP funds to hedge against risk
17.05.12
Hedging is an investment concept that is either too unfamiliar or seems too exotic to be seriously considered by most individual investors. But, as a Thrift Savings Plan investor who is relying on your savings — and your skill at managing those savings — to provide you with an acceptable lifestyle in retirement, you should recognize hedging as an essential element of a sound investment strategy.
Hedging is nothing more than finding ways to reduce the investment risk you face to an acceptable level. Fortunately, the TSP provides you with everything you need to implement an effective strategy to hedge against the various types of investment risk that can derail your retirement plans.
Consider the main sources of investment risk that could cause your retirement plan to fail:
Return risk. This is the risk that your TSP assets will fail to produce the return — growth in value — that is required to meet your expected needs. If you have financial goals that depend on your savings for funding, you’ll need those savings to earn some minimum rate of return over time to support those goals.
Source: Federal Times (blog)