May 10, 2019

The L Funds began accepting contributions in August 2005.

In that year, they consisted of the L Income Fund, the L 2020 Fund, the L 2030 Fund, and the L 2040 Fund.

The most recent fund, the L 2050 Fund, began accepting contributions in February 2011.

The funds consist of a different mix of the TSP stock and bond funds. The L Income is the most conservative, with the least amount of stock fund holdings compared to bond fund holdings. It has almost 75% of total holdings invested in the G Fund, another 6% in the F Fund, and the remainder is invested in the C, S, and I stock funds. (The stock holdings will gradually increase in the coming years, however.)

The L 2050 Fund, in contrast, keeps a majority of investors’ contributions in stock funds. It has over 80% invested in the C, S, and I stock funds, and just under 20% invested in the G and F bond funds.

The funds’ holdings of stock funds compared to bond funds gradually decrease over the years, so that the fund holdings are more conservative - and less prone to major swings in value - as one nears retirement.

Readers can see the current allocations among the L Funds here.

The charts below represent the returns of each L fund based on monthly investments that total the maximum yearly TSP deferral limits*, from the date of each fund’s inception to the end of April 2019. Figures are approximate and will differ depending on actual investment dates and actual amounts invested. Remember: past fund performance does not predict future returns, but the below is a good illustration of what investors can do when investing through thick and thin over the very long-term!

L Income, L 2020, L 2030, L 2040 Funds

Here is a comparison chart of returns in the L Income, L 2020, L 2030, and L 2040 Funds. With contributions from August 2005 to April 2019 of approximately $232,000 in total, the returns varied from $307,917 and $351,646 (for the L Income and L 2020 Funds respectively) to $388,528 and $409,313 (for the L 2030 and L 2040 Funds).

Returns on the L Income, 2020, 2030, and 2040 Funds, 2005-2019 By investing an amount equal to the maximum deferral limit on a monthly basis from 2005 through the end of April 2019 (approximately $232,000), the F Fund returns varied from just under $308,000 to about $409,300.

L 2050 Fund

The L 2050 Fund is the newest among all the TSP funds. Following a total investment of approximately $145,791 in monthly contributions since February 2011, the total investment would be valued at approximately $215,913.

Returns on the L 2050 Fund, 2011-2019 By investing an amount equal to the maximum deferral limit on a monthly basis from 2011 through the end of April 2019 (approximately $146,000), the L 2050 Fund would be worth almost $216,000.

Maintaining steady contributions over the long term matters. For information on returns over a 40-year period when investing even small amounts, see “What Does $1,000 a Year Matter?”.

*The deferral amounts used in the examples above can be reached either as a combination of individual and matching contributions (for civilian and military BRS participants), or solely from individual contributions (for uniformed service members who do not receive a government match). Thus a civilian FERS worker making $80,000 would reach the $18,500 deferral rate for 2019 used in the examples above by contributing $14,500 and receiving $4,000 in 5% government matching contributions, for $18,500 in total contributions for the year. Civilian government workers who receive matching contributions can defer up to the maximum deferral rate — $18,500 in 2019, plus catch-up deferrals for those over 50 — and still receive a match of 5% of their regular salary.

For a complete discussion of the methodology used and calculations, see this page.

Related topics: l-funds