TSP and outside investments

THE THRIFT SAVINGS PLAN ALLOCATION GUIDE Forums Message Board TSP and outside investments

This topic contains 4 replies, has 3 voices, and was last updated by  TS Paul 3 years, 9 months ago.

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  • #16120

    Tiger1209

    Hey,
    First of all, I love the site. I’m currently investing 15% of my salary in the traditional TSP which is approximately $9,000/year. 15% of my salary is all that I can currently afford to invest. I’m wondering if it would not be better to maximize a roth ira and then invest the rest in a TSP? Just curious if anyone has any insight on this?
    Thanks

    #16127

    aoak

    There are no advantages to opening up a Roth IRA account outside of the TSP, maximizing your contributions to it, and then investing the rest of your 15% into the TSP. Instead, I would maximize your contributions to the Roth or Traditional TSP ($18,000) and then open up an outside Roth account and maximize it ($5500 or $6500 based on your given financial circumstance and age). The TSP is the best investment vehicle we have available to us as federal govt employees. In my opinion, the next best investment vehicle after the TSP, once you have maximized the allowable contributions ($18,000), would be a Vanguard Roth IRA.

    TSPaul has provided the TSP equivalent funds that you can invest in outside IRA accounts. Just search “TSP equivalent funds” within the Message board.

    #16133

    TS Paul
    Keymaster

    There is a page with those Vanguard equivalents to the Thrift Savings Plan funds listed here:

    Mutual Fund and ETF Equivalents to TSP Funds

    The TSP Allocation Guide www.TSPallocation.com

    #16456

    pjams42
    Participant

    I am an active duty military service member. Unlike my civilian government employee counterparts, my TSP contributions are not matched by our employer. Consequently, I currently maximize my Roth IRA with Vanguard prior to contributing towards the Roth TSP. I am currently maxing my Roth IRA contributions with Vanguard’s VEXAX fund (which is somewhat equivalent to the TSP S Fund) prior to contributing toward the Roth TSP: S fund.
    Paul,
    Given my current status as an active duty military member, do you think my current plan is wise or would you reccomend contributing toward the Roth TSP prior to contributing towards my Roth IRA?

    #16556

    TS Paul
    Keymaster

    There is no real difference from a tax standpoint, so the issues I see are (1) you have a much wider variety of options to choose from in your ROTH IRA, and (2) you are going to pay a lower expense ratio in your Thrift Savings Plan fund (0.10% in your VEXAX fund compared to 0.029% in your Thrift Savings Plan). So it just depends on what is more important to you.

    The TSP Allocation Guide www.TSPallocation.com

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