The Thrift Savings Plan gives you exactly five core funds: G, F, C, S, and I, plus the Lifecycle (L) target-date funds built from them. That's enough for most people, and TSP's expense ratios are excellent. But TSP has no real estate fund, no small-cap value tilt, and no way to hold individual sector exposure. If you're rolling a TSP balance into an IRA after separating, or investing in a Roth IRA alongside your TSP contributions while still serving, Vanguard's fund lineup is where a lot of veterans and service members end up, mainly because its expense ratios rival TSP's own.
Why Vanguard Specifically
TSP's C Fund (a Vanguard equivalent) has a rock-bottom fund expense ratio, and that's a big part of why TSP is a good deal. Most retail brokerage mutual funds charge more. Vanguard is one of the few fund families whose index funds get close to TSP's own cost structure. VTI (Vanguard Total Stock Market ETF) and VOO (Vanguard S&P 500 ETF) both run around a 0.03% expense ratio, and VXUS (Vanguard Total International Stock ETF) runs around 0.07%. Confirm the exact current figure on Vanguard's own fund pages before you invest, since expense ratios do change.
TSP Funds vs. Their Closest Vanguard Equivalents
| TSP fund | What it holds | Closest Vanguard equivalent |
|---|---|---|
| G Fund | Government securities, no market risk | No real equivalent; nothing in the retail market matches G Fund's guaranteed-no-loss structure |
| F Fund | U.S. investment-grade bonds | BND (Vanguard Total Bond Market ETF) |
| C Fund | S&P 500 large-cap U.S. stocks | VOO (Vanguard S&P 500 ETF) or VTI (Total Stock Market) |
| S Fund | U.S. small and mid-cap stocks (S&P Completion Index) | VXF (Vanguard Extended Market ETF) |
| I Fund | International developed-market stocks | VXUS (Total International Stock) or VEA (Developed Markets) |
The one TSP fund you can't replace outside TSP is the G Fund. It's a government-only product that pays a rate tied to medium- and long-term Treasury yields with no share-price risk, and no retail brokerage fund duplicates that structure. If you roll TSP savings into an IRA, you give up access to G Fund permanently for that money; it's worth weighing before you roll over your full balance rather than a portion.
What Vanguard Adds That TSP Doesn't Have
The main reason to hold a Vanguard account alongside or after TSP isn't lower cost, since TSP's core funds are already cheap. It's coverage TSP's five funds don't offer:
- Real estate (REITs): VNQ (Vanguard Real Estate ETF) gives exposure to real estate investment trusts, an asset class with no TSP equivalent at all.
- Small-cap value tilt: VBR (Vanguard Small-Cap Value ETF) targets a segment of the market TSP's broad S Fund doesn't isolate.
- Emerging markets specifically: VWO (Vanguard Emerging Markets ETF) is a narrower slice than TSP's I Fund, which is developed-market only.
- Target-date simplicity outside TSP: Vanguard Target Retirement funds work like TSP's L Funds, a single fund that auto-rebalances toward a target date, useful if you want a similar hands-off structure in an IRA.
A TSP Rollover, In Practice
When you separate or retire, you can leave your balance in TSP, roll it into an employer 401(k), or roll it into a Traditional or Roth IRA (matching pre-tax TSP to a Traditional IRA, and Roth TSP to a Roth IRA, to avoid an unplanned tax bill). A direct rollover, where the money moves custodian-to-custodian, avoids the 20% mandatory withholding that applies if TSP cuts you a check directly. This site's TSP withdrawal strategies guide covers the rollover mechanics and the other withdrawal options side by side.
A partial rollover is also an option most people don't consider. Nothing requires an all-or-nothing decision: some separating service members move only the Roth portion of their TSP into a Roth IRA for more investment choices, while leaving the traditional balance in TSP to keep access to the G Fund and TSP's low institutional pricing on the rest. Whichever way you split it, request a direct, trustee-to-trustee transfer rather than taking a distribution yourself, since an indirect rollover gives you only 60 days to redeposit the full amount, including the 20% TSP withholds, or the withheld portion is treated as a taxable distribution.
Once the money lands in a Vanguard IRA, a simple starting allocation many veterans use is a three-fund approach: VTI (U.S. total market), VXUS (international), and BND (bonds), weighted by your own risk tolerance and time horizon. It mirrors TSP's C/I/F structure closely, just without the G Fund's guaranteed floor. Our own total-retirement-income-estimator tool can help you see how a rollover balance fits into your overall retirement income picture alongside a pension or VA disability compensation.
When It Makes More Sense to Leave Money in TSP
Rolling over isn't automatically the right move. TSP's institutional pricing means its core funds cost less than the retail share class of nearly any comparable Vanguard mutual fund, even though Vanguard's own ETFs have closed most of that gap. TSP also allows loans and specific withdrawal options that an IRA doesn't offer in the same form, and separated federal employees and retirees can generally keep contributing to and managing a TSP account after leaving service, so there's no hard deadline forcing a rollover decision. If your only goal is holding a simple three-fund-style U.S./international/bond portfolio, TSP's C, I, and F funds already do that job at a comparable cost, without adding a second account to manage.
A Simple Way to See the Cost Difference
Expense ratio differences sound small until you look at them over a full career. A 0.03% expense ratio versus a 0.5% expense ratio (a typical actively managed retail mutual fund) is a 0.47 percentage-point annual drag. On a $50,000 balance, that's roughly $235 a year lost to fees alone, before accounting for how that gap compounds over decades. This isn't a promise of what any fund will return; markets go up and down regardless of cost. It's specifically about the cost side of the equation, which is the one part of investing you can actually control and compare in advance. TSP's core funds and Vanguard's lowest-cost index ETFs are both on the cheap side of that comparison; a higher-cost retail fund at your next civilian employer's 401(k) may not be.
This Isn't Personalized Investment Advice
Fund choice depends on your own timeline, risk tolerance, and tax situation. A fee-only financial advisor (one who doesn't earn commission on the products they recommend) or your installation's Personal Financial Manager can help you apply this to your specific numbers before you roll over a full TSP balance.