block30

Ok, great information, and thanks to everyone again. So I had been wanting to get into TSP, and finally pulled the trigger on that. I have also looked at Vanguard for some time, and I think next year I will finally do the same with them. Sounds like Vanguard comes highly recommended.

block30

Ok, dumb question: how does Vanguard make money with no load and really low expenses?

Also, as far as me investing in American Funds, the brokers were my family's neighbors, at least as far as country living goes. My parents had been happy with their services and how their portfolio performed, and so I started investing at the end of high school.

742Dash

0.17% of someone else's money is not a bad deal (VTSMX is the example here). institutions, such as Vanguard, can also benefit from more efficient trading through systems that are not open to small investors.

And then you have the fact that they run a lean operation without an army of sales people, which is where most of your front end load goes in the form of commissions.

Here comes a plug. The American Association of Independent Investors (AAII) is an organization that you might want to consider joining. I do not use their model portfolios (I am an index investor), but they are a good resource for unbiased education and broad research. They write to a level well above Money Magazine, but still basic enough for us little people to understand.

I think that you will find that the two most important factors to long term results for individual investors have proven to be 1/asset allocation and 2/fees.

UASIT

Fees and asset allocation...Right on...Everything I've read is pointing me in that direction...Lower fees and allocate according to your risk...

globalexpress

Volume. 9 of the top 25 largest funds are Vanguard funds. Taking a small percentage of close to a couple trillion dollars ain't that bad. And Vanguard is owned by the shareholders that own their mutual funds, so the profit motive of high expenses is not there.

Yeah, with American Funds, Ameriprise, Edward Jones, etc., that's how it is. These types of entities work on the "trust" established by their legions of salespeople. When I initially wanted to get into financial planning, a few companies were VERY interested that I was an airline pilot and had little interest in my credentials. Why? Because people look up to and trust airline pilots. What better way to sell product! Tell a potential client that you're an airline pilot and if you can be entrusted with a $100M airplane and the lives of a couple hundred people, you can be entrusted with their portfolio. As I have said repeatedly, the vast majority of financial planners are salesmen, and your best interests are SECONDARY to the sale of whatever product they have to sell.

I mean look at your parents and American Funds. They could have easily found a decent financial planner that could have put them in good funds that didn't take 5%+ of their money, UP FRONT, every time they invested. The American Funds salesperson -ahem- financial planner probably knew that too. But 5% is 5% and American Funds salespeople don't sell Vanguard, so the 5% load they paid! Imagine if your company TOOK the first 5% of any money you put into your 401K or 403b or TSP at work for the "privilege" of being able to take advantage of the benefits of having a 401K. That's what American Funds (and others) do every day!

PorkSoda

I am currently a federal employee but was recently hired by an airline and will be separating from federal service soon. Does anyone know if there are penalties that you must pay on your TSP if they are rolled into your new employers 401K?

UASIT

NO penalties to go from a TSP to 401K. I went from corporate (SAIC) 401K to TSP - no issues...TSP web - site has the forms you need...

N9373M

I am a financial noob, but from what I've read, the TSP is the best deal out there. Extremely low overhead (load?), something like .0027%

Why not keep what you have in your TSP and start a "new" 401K at your new place of employment? Those in the know, please add your .02.

satpak77

TSP is best plan going. I would try to roll 401k into the TSP, not the other way around. That is if possible, not sure, if this action can be done after leaving govt service. I know for a fact that after leaving govt service, you can leave your TSP account in the TSP. Rolling over 401ks after leaving the govt, not sure.

742Dash

IMO keep the TSP. Very low fees and excellent annuities for when you hit retirement.