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Spaf
09-19-2004, 11:51 PM
In about 2 years I'll effect my retirement under FERS. In researching on what to do with my TSP account, I have tentatively settled on two possible actions. Both require a transfer of TSP accounts to traditional IRA's. Vanguard and USAA, appear to be the leaders at the present time. Both have mutual funds with low expense ratios, and both offer plans with and without asset management.

Vanguard seems to be somewhat complicated (with a lot of paperwork), where USAA is somewhat more simplified. I have my auto and home insurance with USAA, and their service has been very good, I just don't know with their investments?

Does anyone have any information on Vanguard or USAA that would sway my choise one way or another? :*

azanon
09-20-2004, 09:21 PM
You're right, both have some great options. Again, if you want a completely fire and forget, one fund for all, i'd probably just pick USAA's Balanced Fund. I see Vanguard has a "balanced index" with a low expense ratio, but despite that it seems to underperform USAA's selection.

Those asset allocation funds are just another form of "balanced" funds, so those would also be nice too.

Shoot for roughly 110- your age in stock. Remember, you're hoping you'll live another 30 years or more, so to keep up with inflation, you should maintain a minimum of 30% stock, but i recommend something closer to the formula.

If you'd prefer not to have to shuffle around money to keep the percentages the same, then just pick one fund like a balanced fund that approximates that percentage. USAA tends to hover close to 60-70% stock in their balanced fund, but they mitigate that by holding a great deal of stable blue chips.

Boring portfolios are some of the best around.

Spaf
09-20-2004, 11:32 PM
Thanks azanon!

I need a boring portfolio for my IRA. I don't want to be greedy. I just want it to work! My other investments I can play with, I just don't want to have to play with my the TSP transfer to a IRA.

USAA gave me a mix for a Mod/Conservative and a Moderate allocation of funds. My rough estimate indicated a 1 yr return of M/C=9.85%, the M=8.55%. Nothing in the M/C showed a loss of over 3% for the last 5 yrs. The M had one loss for 2 yrs over 3%, this was in their large cap growth fund.

Vanguard gave me a mix for a Life Strategy portfolio and a Individual portfolio. My rough estimate indicated a 1 yr return of LS=10.82%, the Individual =10.38%. Both mixes had high returns on international funds, and the Individual fund had a high return on the Windsor II fund. Long term 5 or more years, these funds were not returning that much.

I guess this represents your comments on performance!

Thanks again, and have a great day! :)

azanon
09-21-2004, 06:56 AM
Those sound about right, and would roughly represent the performance you could expect from one balanced fund too if you went that route.

jeeperspeepers
09-21-2004, 02:24 PM
Thanks AZ and Spaf. I'm in a similar time frame for retirement. However, I know nothing about IRAs. Would I do better transferring my TSP to USAA or taking an annuity from TSP? Any advice you can offer will be appreciated. :?

Spaf
09-21-2004, 03:15 PM
jeeperspeepers wrote:
Thanks AZ and Spaf. I'm in a similar time frame for retirement. However, I know nothing about IRAs. Would I do better transferring my TSP to USAA or taking an annuity from TSP? Any advice you can offer will be appreciated. :?


You transfer your TSP into a IRA of mutual funds, You take $ out, and you still have your investment. Annuity is a insurance product, You buy it with your TSP funds. (several models to choose from). Annuities are pricy (my opinion) but very little risk. IRA's always some risk (because you are in the market). At TSP you can figure out your annuity return and options in their calculator. With an IRA you can safely withdraw 4%-5% annually, plus add 3% inflation. So the IRA needs to increase at least 7% on average. However, there are good years, bad years, and average years. Decisions, decisions!

Patricia
09-28-2004, 09:30 AM
My retirement - TSP, Roth IRA, investment????? I just retired with 19+ years with the government - I had an opportunity to work for a private company making alot more money, with better benefits, retirement etc....therefore I took an MRA, which cost me 25% in retirement. I had my accountant look at the options before I retired and this looked like the best thing to do. Now here is my question - I have an Roth IRA which is in an investment (Dodge and Cox Balanced and also in some oil stock)....I also have USAA Balanced Strategy - should I roll my TSP into one of those, leave it until I retire from my current position, then cash it out - take an annunity or...? I want to have my home paid off when I retire ( in 5 years) and was planning on taking the money to finish paying it off... HELP!!!

Spaf
09-28-2004, 09:54 AM
Patricia

Everone need to analyze their retirement based on their own situation. What I have been told is that a Roth IRA is tax paid. Your USAA funds could be tax paid or deferred. Your TSP is tax deferred. It's best to transfer deferred accounts to a traditional IRA, generally. If you take the money, you are gonna owe US about 20%.

Paying off your home can be good or bad. Can you itemize your IRS or will you have to take a standard deduction. Here you (and your accountant) need to crunch the numbers. Married? Spouse working? Other income?

Paying off other bills is my plan i.e., credit cards, cars, etc. Have refinanced my home to a lower rate and paid it down to have the lowest payment but still be able to itemize. Would like to have 20K in emergency, and 100K just to play in the market, plus the FERS to use for my retirement. Most folks say that you can withdraw about 4% from a TSP/IRA transfer and have your principal+inflation in tact (they say this).

Good luck, and have a good day :).

TheProphet
09-28-2004, 10:39 AM
I am planning to KEEP THE CASH...

andpaywhat I have to pay from the returns... 10% - 20%...

withdrawthe maximum the lowest bracket allow you... $58,600 a year today

at !5% fro couples...

Ialso will receive as FERS the1%government pention and the not much

social security... ;-)and hope it still includes medicare, medicaid... etc... ;-)

BOTTOMLINE... I am planning to capiltalize on the TSP and continue investing the

cash...

Leon

TheProphet
09-28-2004, 10:45 AM
HOLD THE CASH !!!

I wouldinvest itin similar Funds like the TSP plan

Dow... DIA

S&P... SPY

S Fund... IWM

Leon

Patricia
09-29-2004, 01:47 PM
:uthanx for the info. I guess I need to have a detailed discussion with my tax accountant.

Patricia

Spaf
09-29-2004, 03:05 PM
Yea!

Seeing your accountant for your situation is the best thing to do.

Ikatteng talks about cash. I was told that you need at least 20K in a liquid account for emergency (money Mkt, mutuals, etc). Once you get your retirement set up, give us some feed back. Like we can compare accountants?

jeeperspeepers
09-29-2004, 03:53 PM
Another idea to consider in or near retirement is using your equity in your home vs. paying it off. I've paid off my home, cars, credit cards, etc. -- everything with retirement in mind. Now I'm refinancing, actually a first mortgage, to build my retirement home and will keep the presenthome for rental investment. The income from the rental willmake the payment on the mortgage. There are interest only mortgages available which are a great deal for people like me, close to retirement, got enough equity in my real property (three rentals in all) to leave to my children, so why do I need to pay off another home. My kids will be very well off when I depart this world anyway. The obvious advantage to interest only mortgage is the low payment, as well as the extra perk of paying (if you wish) any amount you want toward the principle and the entire amount you pay extra goes toward the principle.

Patricia
09-30-2004, 09:31 AM
I have 20K in liquid funds through an equity line of credit. Suze Orman - who I've seen on TV recommends that, as well as paying off all credit cards or at least paying what is charged on a monthly basis, as well as being fully funded in your 401K, TSP, Roth IRA etc. I am...but since I got started with all this soooo late in my career and being single, I'm worried I'll be selling pencils on a street corner if I don't do a few other things - and as I have very little experience in the market, I'm picking everyone's brains. Thanx for all the help. Will let you know what my accountant says.



Patricia:)

Beccazan
11-22-2004, 07:51 AM
I hope this makes you feel better. I started late in my career also. I started TSP as soon as it was offered to active duty and maxed it out ever since. Single with no kids and no debt has allowed me to not only max out TSP, but open a roth (Jan 04) and put $13,000 into ING. My plan is to put another $18000 into ING in 2005 then in 2006 open a balanced fund with Vanguard (vasgx). After I retire from the military (2010) I will rollover TSP into a traditional IRA (vgsix) and use my military pension to continue funding roth and balanced funds. I will buy a home after retirement (not looking to be the next donald trump!)

Hoping this mix is diversified enough so I don't have to freak out about making enough to supplement pension. I am definitely a hands-off investor.

Any comments/suggestions regarding my plan would be appreciated!

Beck

Rolo
11-22-2004, 08:46 AM
Spaf wrote:
Vanguard seems to be somewhat complicated (with a lot of paperwork), where USAA is somewhat more simplified. I have my auto and home insurance with USAA, and their service has been very good, I just don't know with their investments?

Does anyone have any information on Vanguard or USAA that would sway my choise one way or another? :*

I think USAA funds are mediocre at best. Vanguard has much better quality funds and a broader selection. I wouldn't be surprised if their fees were better.

I, too, have all my insurance with USAA as well as my Roth and SEP IRAs with them. You aren't limited to USAA funds if you open a regular IRA account with them, so you have access to just about the entire fund universe. All of my funds are NTF (No Transaction Fee) and there are hundreds to choose. You may not have that flexibility with Vanguard.

My g/f's IRA is with Oppenheimer. They suck. In the future, I will move hers to Scottrade and may move mine to them as well. You have access to pretty much everything through them. The ONLY cost: If you redeem a fund held less than 90 days, you will incur a $17 charge. whoopee...

11-22-2004, 08:58 AM
Rolo wrote:

My g/f's IRA is with Oppenheimer. They suck. In the future, I will move hers to Scottrade and may move mine to them as well. You have access to pretty much everything through them. The ONLY cost: If you redeem a fund held less than 90 days, you will incur a $17 charge. whoopee...


Unless you transfer between the same "family" of funds. :^

11-22-2004, 02:39 PM
Rolo,

With Scottrade, If you invest with Potomac, Rydex or Profunds families, you can keep it in for one day even and sell and there is no fee (no 90 day minimmum! I'm not sure about the same family of funds like Mike was talking about. He's done more recent research than me, but I know the above fund families don't have the $17 fee!

Joel

Rolo
11-22-2004, 03:49 PM
Whoo! I dinna know that. That opens it up for some short-term buying.

Ecurb
11-22-2004, 03:52 PM
Rolo, :#

My wife just retired. :DWe have considered rolling over her TSP to a traditional IRA... ...self directed.She can also take the lump sum (taxable) but we have pretty much ruled that idea out. I wondered if you and the other members could give us your thoughts.

I enjoy reading the message board and Toms morning thoughts on the market. The posts help me make many of my financial decisions,along withmy charting. Sometimes I agree with the posts and sometimes I don't, either way the site is informative and thought provoking thanks to members like yourself...and I notice you are considering Scottrade. Again, if you or anyone else have any suggestions, they will be much appreciated. :^

Ecurb

Rolo
11-22-2004, 05:18 PM
Hey Ecurb!

I have Scottrade for my regular brokerage account and they are great. Eventually, I will move all of my IRA's (my Roth and SEP and my wife-to-be's Roth) over to Scottrade and link them to one login. Excellent service, options, and no fees. Simplify.

I am surprised at how many investment firms dork up the rollover thing. You can:


Withdraw all of your money
Tell them to not withhold taxes as you are doing a transfer
Keep your money for up to sixty days
Place it into a new IRA account
or


State that you want to do a DIRECT CUSTODIAL TRANSFER to Acme Investments, Inc. and to not withhold taxes. Usually, Acme will handle the transfer and not TSP.
This is all in the IRS tax code. I highly recommend Ernst & Young and J.K. Lasser's tax guides. Be sure to click on TSPtalk's Amazon.com links to shop there. Incidentally, I buy 90% of my books from Amazon.

Crap. I ordered a bunch of books there (not investment related) and didn't think to use Tom's links. D'oh!

11-22-2004, 08:11 PM
Ecurb,

I, too, have been with Scottrade for almost 2 years and they, by far are the best for mutual funds.

Good things:

1-no fees for buying mutual funds from the start. In other words, if you have one account and want to buy 10 different mutual funds, there are no fees! I checked with Ameritrade and others and they would charge like $34 or so per fund that you buy! That would be $340 in fees from the above example.

2- If you keep money in a fund for ninety days, there is no fee when you sell (as long as the mutual fund doesn't have a back load or redemtion fee) Now, if you use Potomac, Rydex, or Profunds family of funds, you can have the money in their funds as short as one day, move it between funds (let's say profund bear to profund bull) in those families, and not incur a fee. You can also sell the before mentioned funds after one day and not incur a fee. If using other funds, the fee is only $17 per fund if not kept for 90 days. This is much cheeper than anyone out there.

3- Internet site is easy to work with and you have up to 4:00 pm (3:00 pm for Rydex, Potomac, and Profunds) to sell or buy and you will get the end of day's price. Once you get the hang of it, you can sell like 5 funds in 5 minutes, it really becomes easy.

Drawbacks:

1- Once you sell, you have a 3 day waiting period before you can buy again. This of course, is unless you are transferring within families of funds. For instance, you can transfer from a Bull market fund to a bear market fund within Rydex and it will happen the same day, but you can't make another move with that money for 3 days. All this slows down the timers and day traders, so if you are not trying that approach I would'nt worry about this point #1

2. You don't get any advice. If you're doing it on you own, this doesn't matter.

3. It doesn't have every mutual fund choice. I have done research on different types of funds (small cap growth, large cap value, etc.) and some of the top performing funds over the past 5-10 years are not offered by Scottrade. Which comes to the last sort of drawback.

4. You now have many, many choices. It's no longer 5 funds to choose from but 5000, and that's just mutual funds. It can get confusing.

Incidently, I've lost quite a bit of money this year with all those choices and bad decisions on my part. I'm not sure your philosophy, but you may want to get some help, here (not from me by any means) or an investment advisor before moving it. Rolo kind of touched on this.

That's my two cents and I hope it helps. By the way, I have this same decision with a pension rollover, so I feel your pain.

Joel

11-22-2004, 09:16 PM
You'll need to do "a little" research on the fund you choose too. Some require different minimums to invest in them. Usually lower for an IRA account. Joel said he has invested using less than the "minimum" and it apparently isn't a big problem. I believe it's up the fund manager to accept your offer or not.

I did however see one fund that required a $5,000,000.00 minimum investment! :shock:Don't "quite" have that much yet...........Yet...........:^

Good luck,

M_M

11-22-2004, 09:20 PM
Joel, have you or anybody else done much research on ETF's? I'm tring to find out if they have any "inverse" ETF's or 2X ETF's. Any idea?

Thanks,

M_M

Ecurb
11-22-2004, 10:20 PM
Rolo, Joel, and M_M,

Thanks guys for the advice, I was certain you guys would have great advice and suggestions for us.It will take some time to research and digest all you guys have written. Again, it is much appreciated.

Ecurb :)

Rolo
11-23-2004, 04:40 PM
"Investment Advisor"

BAH!

The "Investment Advisors" herded quite a number of people (g/f being one of them) off the tech-bubble cliff, all the while preaching "safe" mutual funds.

If you are a member of this site, then you can likely do a better job than any "Investment Advisor".

And you can keep the fees for yourself that you would pay for mediocre advice.

Also, many places charge an annual fee just for having an account as well as a minimum balance fee. That's like paying to have a checking account--who the hell does that anymore? Scottrade has none of this. I pay fees for NOTHING. Ever. Not even ATM fees. I will not be nickel-and-dimed by the system.

[line]

Sound investing is not difficult--it just takes a little effort and some time.

Jiggy active-trading takes more effort, more time, and Tums. :cool: