Tagged: Thrift Savings Plan
- This topic has 2 replies, 2 voices, and was last updated 4 years, 4 months ago by Charles.
July 26, 2015 at 12:00 am #16959aoakGuest
I was listening to Dave Ramsey the other day ( I listen to a lot of financial talk…Suze Orman, Motley Fool, Bob Brinker…etc) and Dave recommended to a new retiree to rollover their Thrift Savings Plan into an outside IRA because the funds that are offered outside of the TSP are way better performers. I was a little surprised at the recommendation due to the fact that we TSP investors pay only a few pennies for every $1000 we invest for TSP management. I know that Vanguard provides a similar equivalent in their management of people’s funds but I find it hard to believe that there are tsp-equivalent mutual funds that significantly beat our TSP fund performance. I did some quick research on the C And S find relative to other tsp equivalents. ..specifically Vanguard…and found their 5 year performance to be not that far from the TSP funds. C-Fund = 16% and S-Fund= 16.75. VFInx =15.78 VEXMX = 16.11
Due to my ignorance of the broad mutual fund performances. ..I was wondering if you could provide insight on whether or not it is a good thing to rollover your TSP into “better performing mutual funds” upon retirement? I think that Dave Ramsey may have been referring to non-TSP mutual funds that outperform the TSP funds. But even this argument would have to be based on the outweighing of our TSP’s very low management fees relative to the higher performances of other mutual funds. Whether or not these mutual funds significantly outperform the TSP funds to the point that management fees are negligent…is my biggest question.
Thanks!July 26, 2015 at 1:33 pm #16963TS PaulKeymaster
He must have been referring to nonequivalent funds, because when fees are factored in the TSP funds will always beat their non-TSP equivalents.
On occasion I am attracted to sectors for which there is no TSP equivalent (emerging markets, for example), but never something which I would want to dump the bulk of my retirement investments into. So there is never going to be a time when I’m not satisfied with the choices I have in the TSP for most of my investments.
All signs are that the Thrift Savings Plan is going to open a window to outside investments in the next year or two, so to the extent that this is an issue at all for some people, that should be eliminated.
The bigger issue that the TSP has is in the limited withdrawal options which they offer, in my opinion. They are aware of those shortcomings and are working to improve in that area as well.
I’m still years away from being in a position to move money out of the Thrift Savings Plan, but to the extent that I have looked at the possibility I don’t believe it is at all likely that I will move any money out to an alternative vehicle.
The TSP Allocation Guide www.TSPallocation.comAugust 31, 2015 at 11:54 pm #17099CharlesGuest
I am a firm believer you should have 70% of your investments in 3-5 core investments.
S&p500/ large cap
pretty much what TSP gives us.
I have a fund in health care that has blown our funds out of the water by 7% higher then C,S,I has done almost every year. It’s cost is .8% vs .0029% of our TSP.
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