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Diversify Thrift Savings Plan?

Jim wants to know if he should diversify the 200K he has in his government thrift savings plan, or just diversify from now on.

QUESTION: Jim is a government employee.  He has 100% of his thrift saving plan in the C fund.  He has $200,000 in the thrift savings plan now.  Should he leave it all in the C fund and diversify from now on?  Or should he diversify the $200,000 that’s already there among the C, S, and I funds?

ANSWER: The S is a small-cap index fund based on the Russell index.  “Cap” means capitalization, which means money and “small-cap” means small company.  This would be a start-up company or one that’s just gone public.  A lot of the healthcare and technology companies are in that category.  Those companies are seldom stable.  That’s why the S category has a better average rate of return than the C does with much more risk.

The I fund is the international index, based on a Euro-Pacific index.  Index means a spread of companies in the Euro-Pacific part of the world.  It has the poorest track record of the C, S, and I funds. 

The C fund is a common stock fund like an SNP500 with companies like McDonald’s, Coca-Cola, and Home Depot. 

You should not do anything with the $200,000 that you already have invested.  From now on, you should put 40% in the C fund, 40% in the S fund, and 20% in the I fund.  You’re taking a little more risk with the small-cap businesses and you’re risking as well with the international funds, but you’re also putting a very good amount into the most stable companies in America.