Q: I saw my TSP drop by $100,ooo in 2008. I’d like to be ahead here if a default does happen. In an earlier post you said there would be no change in the G fund, but if the bond rating is downgraded, how could that be correct? That would impact immensely on the G fund’s value. What other options do we have to safeguard what we’ve amassed?
A: It could be, and is true. You did not see your G fund investment drop in value in 2008. Changes in the market value of government bonds DO NOT affect the value of your G fund investment. The G fund is not a direct investment in U.S. bonds and bears no risk to principal. The G fund is the safest place for your TSP money.