While the headline isn't that surprising, what is to me is that only 1% of participants are in the S Fund which is where I have most my money positioned. Does any of this surprise any of you?
@jose96 I am really glad the default contribution is to the age appropriate target date fund now. That was not the case in 2007 when I signed up. Took me a few years to realize all my money was going into bonds. In hindsight, perfect timing with the recession.
@seekingunderstanding Took me 6, cause I just assumed and never asked anyone. 10% of my paycheck into that fund (with a 2-5% bump every promotion). missed the whole rebound from the 07 crash. fucking sucked.
@chaz1268 True. Even if you only have say 5% in the G fund it counts against the 47.6% of participants. I’m sure older and even some younger folks have G fund allocations
@burl This is me, I have 5% in the G Fund. I rebalance annually and it's a hedge against market volatility, in exchange for drastically reduced gains on that portion of my portfolio.
@resjudicata I have 20% (just like the taxable account). I want to be able to DCA/reblance into any dips and don't need/want that much cash on hand while I'm active.
@burl I believe all the life cycle funds are in the G Fund as well meaning that even if your in a life cycle find I think it still counts you in the G Fund, idk though the graph didn't really explain that.
@jose96 I wouldn't think it does as the graph had it broken down by percentages using each different fund. Putting those lifecycle users in with the equiv percentage into the respective named funds would completely screw the reporting.
I do not doubt that most are in the g fund. I believe that is the one you initially start in and unless you go into the website and change things you stay there
@rhys121 Used to be that way, I believe they finally changed it a couple years ago (maybe alongside BRS?) to a lifecycle fund. But yeah, I knew a guy that contributed regularly, got out after 5 years with nothing to show for it because he never changed it from the G Fund.
@chaz1268 Not to many older military folks in TSP at all though. I retired in 2011 and never put anything in it. There was no match so no incentive. No one I knew put anything in it either. I always had a separate Roth and a brokerage account instead.. If those number include government employees however, that could be part true.
@misty2009 I've always asked why people like TSP. Lots of great brokerages/IRAs are zero fee (e.g. Schwab) with far better service and infinitely more choices. Funds like VTI are 0.03% or below, while TSP is 0.05-0.07% and underperforms.
I use TSP after my Roth IRA and 529, but that's because I've run out of better options.
A TSP offers you much more room to invest money into a tax advantaged account. IRA's are limited for most people at 6K a year. Participating in TSP gives the individual another 19.5K to invest that will be ALL tax free gains. Cant find that in any brokerage account, plus tax drag on any dividends.
Funds like VTI are 0.03% or below, while TSP is 0.05-0.07% and underperforms
Rather negligible difference, you're paying an extra 2-4 dollars for every 10K invested every year. Plus that expense ration on a LifeCycle fund, hard to find a target date fund anywhere cheaper. TSP easily has some of the cheapest funds across the board when compared to a lot of 401K options most people have.
@resjudicata Yes, TSP offers another tax shelter of last resort, but people here frequently make comments like the above.
Yes, the fees are a small difference, but there aren't many big differences left in retail brokerage. Why choose a fund that's not in the top dozen performers and a "brokerage" that's not in the top hundred? Again, unless you've already exhausted better options.
I have heard that the G fund is pretty competitive if you're interested in bonds. I'll admit my ignorance of both that and target date funds because they're not particularly useful for most military age investors.
@resjudicata The question is, whenever you leave the military are you going to leave it in a TSP or roll it to a IRA?
Pro's of staying-
Access to the G fund
Lazy man's option
Cons-
Limited fund choices
Higher expense ratios
Weaker interface (this is somewhat subjective and I will give TSP credit in attempting to update their interface to 2021 but still lagging IMO).
Weaker Customer Service.
Access to Personal Advisors (not for everyone, but I've told my wife, who knows very little about PF, that if I die, to just call Vabguard and start using their Personal Advisor service for 30 bps)
I just am seeing less and less of a reason to stay TSP as I get closer to getting out. This coming from a guy who was planning to roll my 401ks to TSP when I got out.
@chaz1268 I use Vanguard. Fees are negligible (.35% is $3500 on $1,000,000) and the funds often perform better, but the interface and service is worlds better.
