World-Class Investing with the TSP: How Military Members Can Invest Like Buffett, Bogle, and Collins
With expense ratios as low as 0.025% and a passive index investing structure endorsed by Buffett, Bogle, and Collins, the TSP gives military members access to world-class investing at an unmatched cost.
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- The TSP combines two elements championed by legendary investors like Warren Buffett and John C. Bogle, low fees and passive index investing, making it one of the most powerful retirement savings tools available to any investor
- TSP expense ratios range from approximately 0.025% to 0.079% depending on the fund, among the lowest of any investment vehicle in the world, with less than 1% of roughly 170,000 investment funds globally reporting expenses this low
- The Blended Retirement System’s automatic enrollment and government matching contributions make the TSP even more compelling. Military members who contribute at least 5% of base pay capture the full government match and maximize one of the best retirement benefits available
Military members have some significant advantages when it comes to reaching financial independence, and two of the biggest are the military retirement pay and benefits and the Thrift Savings Plan. This article focuses on why the TSP is such a powerful investment vehicle and how military members can use it to invest in the same way that some of the most respected investors in the world recommend.
The Two Elements That Make the TSP World-Class
The TSP combines two elements recommended by some of the most respected investment minds in history: low fees and passive index investing. Together these two features give military members access to an investment approach that most civilian investors spend years trying to replicate — and often pay significantly more to access.
Why TSP Fees Are Among the Lowest in the World
All investments have associated costs. If you trade stocks you pay trading commissions. If you buy mutual funds you may pay front-load or back-load fees on top of ongoing management expenses. These fees reduce your investment returns every year, whether your investments make money or not.
Industry-standard expense ratios of around 1.0% can reduce the growth of a portfolio by over 30% over a lifetime. Larger expenses of 2% or 3% can reduce returns by over 50% and 60% respectively. Keeping investment fees as low as possible is one of the most impactful things an investor can do and it requires no skill, no market timing, and no luck.
How Low Are TSP Fees?
The TSP charges expense ratios ranging from approximately 0.025% to 0.079% depending on the fund. As of January 2026, less than 1% of the roughly 170,000 investment funds tracked globally reported expenses this low. Even Vanguard, widely considered the gold standard of low-cost investing, charges expense ratios starting at 0.04% on its index ETFs.
This is precisely what John C. Bogle, founder of Vanguard and the passive index fund, advocated throughout his career. In his book The Little Book of Common Sense Investing, Bogle wrote:
“…the winning strategy is to own all of the nation’s publicly held businesses at very low cost. By doing so you are guaranteed to capture almost the entire return they generate in the form of dividends and earnings growth.”
The TSP allows you to do exactly that at a cost that is virtually unmatched anywhere in the investment industry.
Why Passive Index Investing Outperforms Active Management
One reason investing gets a bad reputation is that many people treat it like gambling, timing the market, chasing hot stocks, and paying high fees to fund managers who claim they can outperform the market. The evidence overwhelmingly shows that this approach does not work over the long run.
The TSP uses passive index investing. The five core funds track broad segments of the market, ensuring you capture essentially the entire market’s gains at minimal cost, just as Bogle recommended.
The Warren Buffett Proof
Warren Buffett made a million-dollar wager with active hedge fund managers, betting that a simple S&P 500 index fund would outperform actively managed funds over a 10-year period. Over that decade, Buffett was right. The S&P 500 index fund returned +85% compared to just +22% for the active hedge fund managers. Buffett won the bet and the proceeds were donated to charity.
The TSP’s C Fund tracks the S&P 500, giving military members direct access to exactly the type of low-cost index investing that Buffett proved outperforms active management over time.
The Five Core TSP Funds and Their Expense Ratios
When you invest in the TSP you choose your own combination of funds. By default, contributions go into the age-appropriate Lifecycle fund, but you can customize your allocation across five core funds that cover much of the global market:
- C Fund — Large-cap US stocks tracking the S&P 500 (expense ratio: 0.025%)
- S Fund — Small-cap US stocks tracking the Dow Jones US Completion Total Stock Market Index (expense ratio: 0.059%)
- I Fund — International stocks tracking a broad international index including developed and emerging markets (expense ratio: 0.054%)
- G Fund — US government securities offering a guaranteed return with no risk of loss
- F Fund — Government, corporate, and mortgage-backed bonds
Together the C, S, and I funds give you exposure to the entire global stock market, precisely the type of broad diversification that Bogle and Buffett recommend.
TSP Lifecycle Funds: Target Date Investing Made Easy
The TSP also offers Lifecycle funds, target-date funds that automatically balance your portfolio based on your expected retirement date. These funds start with more aggressive growth-oriented allocations when you are young and gradually shift to more conservative investments as you approach retirement.
Jim Collins, author of The Simple Path to Wealth and one of the most respected voices in the FIRE (Financial Independence, Retire Early) community, is a strong advocate for low-cost index investing, including target-date funds. Collins typically recommends that civilian investors roll their 401(k) into an IRA when they leave an employer since many 401(k) plans do not offer truly low-cost investing. However, he makes an exception for the TSP, recommending that those with TSP accounts keep their money there even after leaving service, and consider rolling new 401(k) accounts back into the TSP, given its unmatched combination of low fees and strong fund options.
The Blended Retirement System Makes the TSP Even More Compelling
The military overhauled its retirement system with the Blended Retirement System. The previous High-3 retirement plan offered only a cliff-vesting pension, all or nothing at 20 years. The BRS keeps the pension at a slightly lower rate but adds government matching contributions to the TSP.
The BRS automatically enrolls new service members in the TSP beginning in 2018, with a default contribution of 3% of base pay, increased to 5% for those who enrolled on or after October 1, 2020. Service members who contribute at least 5% of base pay receive the full government match of up to 5%, effectively doubling their contribution rate on those dollars.
For 2026, military members can contribute up to $24,500 annually to their TSP, one of the highest contribution limits of any tax-advantaged retirement account available to American workers.
Why the TSP May Be the Best Retirement Account Available
If you are not sure whether to invest in the TSP or looking for reasons to invest only up to 5% for the match, consider this: the TSP gives you access to the same low-cost, passive index investing approach that Buffett, Bogle, and Collins all recommend, at a cost that is lower than virtually any other investment vehicle available.
The combination of low fees, broad diversification, tax-advantaged growth, and government matching contributions under the BRS makes the TSP one of the most powerful retirement savings tools available to any investor, not just military members.
For military members pursuing financial independence, the TSP is not just a good option. For most, it is the best place to start.
