BravoHotel
Well-Known Member
Good evening. Any government types here utilize the TSP? Pros? Cons? Thanks!
TSP?
- Thread starter BravoHotel
- Start date
block30
Well-Known Member
Hello, PM sent. I included information to what I think is a good discussion on that matter. Basically TSP has NO load/commissions and really, really, really low expenses. Like .027% low. Their C fund has a lifetime (1988 inception) return of 9.5%, just slightly below the S&P. The downs are that there isn't much variety, only five or six funds. However, the simplicity of that low number of elections may be a "pro." As I wrote you, I wish I had started contributing sooner.
If you are military, which I assume you are, just log into mypay and find TSP. Make a selection of how much you want to contribute. No need to stop by the Finance office and do paperwork!! Great news for Guard guys like myself! If you haven't already, you can read their prospectus on the various funds at tsp.gov and do some google searching. It seems from what I can find, the low fee cost structure is raved about. For me, TSP is just one part of my portfolio, but an important one going forward. Keep us posted!
If you are military, which I assume you are, just log into mypay and find TSP. Make a selection of how much you want to contribute. No need to stop by the Finance office and do paperwork!! Great news for Guard guys like myself! If you haven't already, you can read their prospectus on the various funds at tsp.gov and do some google searching. It seems from what I can find, the low fee cost structure is raved about. For me, TSP is just one part of my portfolio, but an important one going forward. Keep us posted!
hook_dupin
Well-Known Member
Roth TSP rolled out a year ago. Compared to a Roth IRA, there is no income cap and a $17.5K contribution limit. If you go with TSP, you also have to make a Roth vs traditional decision.
If you're military, here's my strategy: max Roth TSP while in a combat zone. That way, it goes in tax-free, grows, and exits tax free.
If you're a GS type, it's a no-brainier to contribute enough to get the maximum matching contributions.
If you're military, here's my strategy: max Roth TSP while in a combat zone. That way, it goes in tax-free, grows, and exits tax free.
If you're a GS type, it's a no-brainier to contribute enough to get the maximum matching contributions.
block30
Well-Known Member
Excellent points!! Thanks for mentioning that!
BravoHotel
Well-Known Member
Well my TSP started on this month's reserve drill pay. Only $40, but it is a start.
Stone Cold
Well-Known Member
Everybody has to start somewhere, and that is a very good place to start!
hook_dupin
Well-Known Member
True statement. Maxing both in 2014 gives you $23K of tax-free growth. Pretty insane, really.
ElihuSmails
Well-Known Member
One word about tax-free pay and TSP. Even the traditional TSP tracks your tax-free contributions and they remain tax free as they grow inside the funds.
Houston
Well-Known Member
One thing to bear in mind about the Roth, whether it be TSP or IRA is that you have to be in it for five years in order to draw money out without it being taxed. So, even if you decide to contribute to a traditional IRA / tax-deferred TSP, it is a good idea to put a little in the Roth side. That will let the five year clock start ticking. Also, if you have one or the other type of Roth account, the five year rule starts from when you opened the fist one.
Houston
Well-Known Member
I think you've got it right, but let me just restate the wording.
If you put money into a tax-free pay TSP or a traditional IRA, the money you put in (the BASIS) is tax free when you withdraw it. The money it earned is not tax free when you withdraw it.
It's also important to track and report the basis on your traditional IRA as you contribute to it. That is one feature that makes the Roth more attractive. You don't have to keep track of a basis because it is all tax free.
N90-EWR
Well-Known Member
Contribute to the max, or as much as you can from the get go. First thing I always tell the new guys. No matter what your situation is, always pay yourself first.
ACS/AFRC/whatever the Navy/MC family readiness programs are usually have a quarterly class on personal finances.
Or read Rich Dad, Poor Dad.
Good rule of thumb: save/invest 20%. As you get pay increases, add those to your savings/investment plan. Net or gross? Your choice, really.
If possible (and it makes sense), buy an income property (with 20% down) where your monthly PITI will be less than your BAH. Lather, rinse, repeat at each duty station.
Next thing you know, you've got five or six cash flowing properties, $2.2M in IRAs, TSP and other parts of your portfolio and you're retiring at 20 years of service with a $5+M net worth.
Is it tough to do? Yep. Can it be done? Yep.
N90-EWR
Well-Known Member
I must had done something wrong. I'm way past 20 years of service, and not yet at that $5+M net worth!
I must had done something wrong. I'm way past 20 years of service, and not yet at that $5+M net worth!
When I was about six years in, there was a Nav on my crew that owned 17 townhouse outright. Between the real estate and investments he had a net worth of over $14M.
Mongoose121
Roger Ball!
Financial discipline is something that is lacking in the younger generation (my personal opinion). I'm pleased to see the 20% figure being discussed as I think that's an excellent benchmark to reference towards a comfortable retirement. To comment on TSP, I've got nothing but good things to say about the L-funds. Expenses are quite low which means you're returns will work more for you as the years go by. Live well, below your means.
HVYMETALDRVR
Well-Known Member
As a funds go, what the TSP has available is top notch, lately I've been leaning towards income properties for reasons stated above. Whole 'nother discussion obviously...
My only negative critique (and its minor) is that once the money goes into the TSP you can't take it out unless you 1. get out of the military or 2. can prove extreme financial hardship. I read through the prospectus but missed that, my fault. Just keep that in mind as your putting money in.
My only negative critique (and its minor) is that once the money goes into the TSP you can't take it out unless you 1. get out of the military or 2. can prove extreme financial hardship. I read through the prospectus but missed that, my fault. Just keep that in mind as your putting money in.
As usual, I'm late getting into the discussions here...
If you are military, another good resource if you have an account (insurance or banking or the new 2LT/ENS career starter loan) is USAA. You might not have much starting out as a new LT, but it's part of the services USAA provides - their financial planners are on staff because that's what USAA members wanted. They don't charge a commission. They look at your whole picture and can devise a financial strategy for you and if you want they can even give financial education about your options.
They can do it over the phone or you can meet with one in person at a base near you.
Just don't get a mortgage with USAA. Their process sucks, the rest of the company is pretty good in my experience.
Blackhawk
Well-Known Member
Funny to see this discussion as I just went in and increased the amount going into my wife's ROTH TSP and checked the allocations.
As previously posted one of the best deals out there. Maximize it, especially if you are young.
My recommendation at your age is equal allotment to C, S, and I funds (common stock, small cap, international).
Don't worry about the fund's worth going up and down annually at this point. You are not so concerned how the fund is doing when you are 30, but when you are 60.
When you start getting about 10-15 years from retirement start reallocating the funds to more conservative, fixed income funds but still invest in the ones above to some extent.
As previously posted one of the best deals out there. Maximize it, especially if you are young.
My recommendation at your age is equal allotment to C, S, and I funds (common stock, small cap, international).
Don't worry about the fund's worth going up and down annually at this point. You are not so concerned how the fund is doing when you are 30, but when you are 60.
When you start getting about 10-15 years from retirement start reallocating the funds to more conservative, fixed income funds but still invest in the ones above to some extent.
