Originally Posted by
block30
Hello all, I apologize for crashing the thread, but he's a real noob question(s); as a guardsman, is it worth getting into TSP? I have an American Funds Roth IRA since high school, and Roth 401k with small match from my civilian employer. Is there any reason to get into TSP, or should I instead just use the same amount of money to put in my American Funds IRA? Also, I notice you talk about Vanguard. What do you think of them? Vanguard has piqued my interest, but I believe their initial investment minimum is $3,000. If I were still single, no problem. But with anything now, my wife nixes just about any spending I do.
I am 54. Between my wife and I we have IRAs, Roth IRAs and my 401k. All are set up as brokerage accounts (meaning that we can buy and sell just about anything). I think that we would be considered to be fairly knowledgeable, and have both picked stocks and used options (mostly selling covered Calls and buying protective Puts). We have done OK over the years.
My wife also has a TSP account. It is very, very impressive. And after years of watching it sit there and simmer I finnally got it. Fees kill you in the long term. You are not, without great luck and risk, going to beat the market over the long term. Individual investors are just chum in the water for the professionals.
So we not only use the TSP, we have gone that route with everything. I selected an asset allocation that I felt was appropriate for our situation, and then created it across all of our accccounts using very low cost index funds and ETFs. Just like what the TSP offers. This is very simple, takes little maintenance and is not going to blow up on me. I don't have to worry about some MBA investing "my" mutual fund in the Pakistan pork belly market, CEOs leaving for Israel with the company cash or CFOs who have created financial houses of cards.
So: Select an asset allocation. Fill it with low cost index funds and ETFs. Rebalance once a year. Adjust the allocation model every 5 years. Not only max the TSP, use it as the standard for everything else.
Another major advantage of the TSP is that it's annuities are excellent. These are not the annuities of various forms that crawl out of the sewers around Wall Street, but the simple single payment annuities that at are in effect retirement plans. These are going to become more and more important in a world of self financed retirement, and the TSP's are by far the best that you are going to find. Again, fees are critical. This is not something that you need to do anything about until your actual retirement, but at that point you need money in the TSP in order to have this option.
So TSP? Absolutely!
As for your wife, perhaps she is wary of you trying to invest aggressively. She may have friends who have had spouses lose money in the market. But most women fear living on cat food in retirement, so it should not be hard to get her onboard with a retirement plan (yes, I am being a bit sexist here). Emphasis on the word "plan". And she might be more comfortable with a passive index approach as opposed to one that involves active management.
Sorry for the long answer. And best of luck.