As of March 2014, the TSP G Fund interest rate is 2.250%. The rate is calculated monthly, based on the average yield of all U.S. Treasury securities with 4 or more years to maturity. The chart and table below show the recent history of the G Fund rate. You can see that interest rates have been rising:
The G Fund interest rate is still near all-time lows. In 2012, it was as low as 1.25 percent. But if you look back further in history to the late 1980s, the G Fund returned over 9 percent per year:
The G Fund compares very favorably to other risk-free investments. For example, in July 2013, the G Fund interest rate was 2.125%. By comparison, the best Bank CDs were yielding 0.45% for a 3-month term, or 1.8% for a 5-month term. Also, from the chart above you can see that the interest rate on the G Fund is almost always higher than the 3-month Treasury Bill yield.
The G fund will not lose money — its returns are guaranteed by the U.S. Government. That makes it very different from a typical bond fund, where your principal fluctuates with the rise and fall of interest rates. The chart below shows the historical performance of the TSP G Fund, and is updated every business day with the latest TSP G Fund price:
The G Fund has earned a compound annualized return of 5.1% since August 1990. Its year-to-date return is 0.43%, and its 1-year return is 2.04%. A $1,000 investment in 1990 would be worth $3,191 today.