TSP L Fund 2040 versus USAA 2040 Target Fund which is betters

[kendrickg]

I am retired military and recently began working civil service. When I retired I rolled my TSP balance into USAA's Target Retirement Fund 2040. My question is should I leave it there or transfer it back to the TSP? I am mostly thinking about expenses. Any thoughts? I have about 20 years before my next retirement.

Thanks,

Gary

[JTH]

As a USAA member, I've looked at some of the USAA funds myself. I can't speak for their performance, but at least with USAA funds you have more mobility, meaning you can pull your funds out faster then with TSP's end of day transactions.

[James48843]

Kendrickg:

The answer is....it depends.

The USAA 2040 is slightly different in composition from the TSP's 2040. USAA has higher content of equities, and no bond component. On the other hand, USAA has a slightly higher fee structure, although USAA's prospectus says they are waiving their fees until December of 2010 on this fund. I see some good things about it- it has some precious metal components, for example, and some bad things- higher fees than the TSP 2040 entails. However, no one can know which of the two will perform better over the next 30 years (until 2040).

Here is a clip of the components that make up USAA's 2040 fund:

usaa2040.jpg

and here is an extract from their perspectus about the fees involved in the USAA 2040 fund:

usaa2040_fees.jpg

The best thing to do would probably be talk to a professional financial advisor licensed to give you advice. None of us here can/will do that. USAA does have professionals on staff who can review your unique situation with you, and help come up with a plan that you are comfortable with.

I have been a USAA member since 1991, and I like them. But I keep my own TSP in the TSP, not elsewhere. I have both a military and a civilain account in TSP. That's me. My wife has USAA do her retirement account, and she is happy.

Good luck.

[va.gov]

Just a comment/ question: aren't the income fund and high-yield opportunities fund bonds? You had said that there wasn't a bond component of the USAA 2040. If I read this correctly, there is.

Of course, the "high-yield opportunities fund" would be better known as the junk bond fund. "High-yield" is just a euphemism. Nothing wrong with them, as long as you know what you're dealing with.