Invest In BRS or my own IRA

[abigheart]

Hello, so I’m going to boot camp and AIT from May-December and will bring in a decent amount of money, I currently have my TSP set to 30% but also have a IRA through American Mutual Funds that I have been investing in, I’m wondering if I should do both or just put into one? The IRA has like 1.1k right now and I’m 19 years old in college. I also set my TSP to be 40% - C, 30% - S, 30% - F

 

[rqhullett]

@abigheart

1. What’s the ER of the funds in your IRA.
2. You can & should do both. TSP to match, max Roth IRA, then work on maxing TSP.
3. I’d probably look into establishing an emergency fund in a HYSA then go to step 2.

 

[casspol]

@rqhullett

You can & should do both. TSP to match, max Roth IRA, then work on maxing TSP.

NO. This is great advice for a 401k, it is terrible advice for TSP. The reason people suggest maxing out IRA before 401k is due to expense ratios. The ER on TSP is way lower than anything you from a civilian 401k, and at or below equivelent funds (such as vanguard) you could invest your IRA in.

Max TSP first, IRA comes later.

 

[rqhullett]

@casspol Well, like you said, your statement is no longer accurate. VOO would like a word.... So my statement still stands.

 

[casspol]

@rqhullett

and at or below equivelent funds

VOO is an ETF, not a mutual fund.

 

[rqhullett]

@casspol It tracks the S & P 500. Just like the C Fund. You can buy both in an IRA.

You legitimately said TSP over IRA for ER purposes. I’m showing you one of many examples where your statement is false.

 

[casspol]

@rqhullett And I specifically said equivelent funds, ETF is not equivelent to TSP funds. Mutual funds are equivelent to TSP funds in that TSP funds are... mutual funds.

ETF are good in taxable accounts due to their tax advantages, those advantages do not apply in tax advantaged accounts such as IRA, 401k, TSP. I want every penny of my money in tax advantaged accounts busy making me more money, with an ETF I can't do that.

 

[rqhullett]

@casspol Yes but one of the advantages is selection of funds. You can’t say TSP over IRA without understanding & acknowledging the reason most people recommend TSP/401k to match, IRA, then max TSP/401k.

I see that you stated equivalent funds but narrowing comparison to those takes away a key factor of the IRA, freedom to select funds.

Since you want to address MF’s only, there are now zero fee MF’s offered.

I like the TSP, I use the TSP, but there are better funds available that can be purchased before going back to max.

 

[casspol]

@rqhullett Fund selection isn't an issue with TSP at all, all you need are wide market index funds, the C and S cover pretty much the entire US market. If you want to add in international exposure you have the I, if you want bonds you have the F and G.

I know Fidelity has opened some 0 ER funds, but they are too new to be trusted IMO. Too easy for them to change things or close down those funds in a couple years. Once they've been around for a while, I'll probably change my opinion on them.

The reason people suggest maxing out IRA before 401k is primarily fees, but you're right fund selection is also a concern. 401ks generally have shitty fund options and high fees, most of the ones I had in the private sector didn't even offer a single decent wide or total market index fund.

 

[rqhullett]

@casspol I’m aware. Fund selection... for lower fees which is all this has been talking about.

 

[abigheart]

@rqhullett I have made around 10% of my money in the IRA as of right now(6 months after creating the account)

 

[rqhullett]

@abigheart What’s the expense ratio of the fund(s) you’re in.