Can You Directly Buy Gold Through TSP?

Thrift Savings Plan (TSP), like 401(k), is an investment and retirement savings account offered exclusively to U.S. civil service employees and members of uniformed services. Given this investment choice's increasing popularity among investors looking for diversification with precious metals such as gold, it may be necessary for some to see whether TSP accommodates this option for investing. In this article we explore all investment choices within TSP including exposure opportunities as well as ways you could incorporate gold investments in your wider retirement strategy.

Can You Directly Buy Gold Through TSP?

Understanding TSP Investment Options

The TSP currently offers five individual funds and five Lifecycle (L) Funds to its participants, comprising of government securities (G Fund), fixed income (F Fund), common stocks (C Fund), international stocks (I Fund), and small capitalization stocks (S Fund). Lifecycle Funds provide mixed investments by automatically shifting riskier to more conservative investments as participants approach retirement age.

Gold as an Investment

For centuries, gold has been valued as an essential commodity and asset class by investors as an antidote against economic uncertainty and currency devaluations. Though not offering dividends or interest payments directly, investing in gold may provide protection from inflation or currency devaluation and even provide investors with peace of mind in times of economic unease.

Can You Directly Invest in Gold Through TSP?

TSP does not currently offer direct investment in precious metals like gold. Instead, their focus lies on offering diversified exposure to traditional asset classes like stocks and bonds; investing directly or through ETFs such as Gold ETNs is therefore not available through TSP's standard investment choices.

One could make an indirect case that gold could be indirectly exposed via investing in international stocks through I Fund, though such exposure would only serve to indirectly cover gold mining or related activities; and should not serve as a replacement to investing directly.

Options Available Outside TSP for Gold Investment

  • Gold Exchange-Traded Funds (ETFs): Exchange Traded Funds that invest in gold can be bought and sold on stock exchanges; examples include SPDR Gold Shares (GLD) and iShares Gold Trust (IAU).

  • Physical Gold: Another method of investing in physical gold involves purchasing coins or bars through various dealers; note, though, that this approach involves additional storage and insurance expenses.
  • Gold Mining Stocks: One way of diversifying into the gold market is investing in companies that my gold.

  • Gold Mutual Funds: These mutual funds invest primarily in gold bullion as well as mining stocks.

  • Self-Directed IRA: Consider rolling funds over from TSP into a Self-Directed Individual Retirement Account (IRA), which offers more options when investing, such as precious metals.

Conclusion

Although TSP doesn't allow direct investment of gold, there are still effective strategies available for including precious metals into your retirement portfolio. When making such decisions it is crucial that one consider their goals, time horizon and risk tolerance when selecting how gold should fit within them; consulting a financial advisor could also prove valuable when making informed choices regarding expanding with precious metals diversification strategies.