TSP investors suspending contributions [Archive]

CountryBoy

12-16-2008, 03:25 PM

I think the majority of people on this MB who have suspended TSP contributions have done it to fund IRAs instead. In this economy it's nice to be able to have more financial control than 2 IFTs several hours prior to COB for the markets. :rolleyes:

Lady

I have halved my contributions to the TSP because the Board, who is supposedly looking out for our best interests, :rolleyes:to fund ROTH's and 2 individual accounts, by purchasing dividend producing stocks. With only 2 IFT's the Board has forced us into the untenable position of losing money in this bear market or just sitting in the G Fund with negligible return, especially with the Feds move today. Things will only get worse, and the people who put us in this position are the ones trying to solve the problem. :confused: It's sad what lack of leadership we have, now and in the future.

If I had followed the Board's guidance, I would be down a minimum of $67K with only 4 years left to retire. I have managed to squeak out a little profit this year, more luck than skill. The ham handed leadership provided by Long, who even in the monthly minutes has admitted to losing money since the start of the 2 IFT limit, because of the lack of IFT's is limiting the possibility of increasing your retirement fund which also produces funds for everyone.

I am much better off investing myself and if they ever stopped the matching funds, the TSP would be just become a shell of itself. If given the opportunity to with my money without a penalty, I would in a heart beat. I firmly believe Long's objedctive is to destroy the TSP, because all his actions have been nothing but detrimental to us and the Fund.

CB

XL-entLady

12-16-2008, 03:40 PM

I have halved my contributions to the TSP because the Board, who is supposedly looking out for our best interests, :rolleyes:to fund ROTH's and 2 individual accounts, by purchasing dividend producing stocks. With only 2 IFT's the Board has forced us into the untenable position of losing money in this bear market or just sitting in the G Fund with negligible return, especially with the Feds move today. Things will only get worse, and the people who put us in this position are the ones trying to solve the problem. :confused: It's sad what lack of leadership we have, now and in the future.

If I had followed the Board's guidance, I would be down a minimum of $67K with only 4 years left to retire. I have managed to squeak out a little profit this year, more luck than skill. The ham handed leadership provided by Long, who even in the monthly minutes has admitted to losing money since the start of the 2 IFT limit, because of the lack of IFT's is limiting the possibility of increasing your retirement fund which also produces funds for everyone.

I am much better off investing myself and if they ever stopped the matching funds, the TSP would be decimated.

CB
Amen, CB. My spouse and I both retired from federal government and we are considering pulling one of our two TSP accounts and rolling it over into an IRA. It's impossible to make enough income to fund a long retired life with my huge medical bills and almost certain severe inflation in the economic future given the handcuffs that currently shackle our TSP accounts. :suspicious:

Lady

Rod

12-16-2008, 09:01 PM

It's quite simple.

The Thrift Board has taken away our IFT freedoms.

They will say people have stopped contributing because of the recession. But, I say it's because of the extremely limited IFTs.

Bring back unlimited IFTs and contributions will increase.

-Rod

Show-me

12-16-2008, 09:33 PM

Stephen,

A lack of inter fund transfers and being force to buy and hold or stand on the side line for a month while missing massive swings in the market to trade off of. A lack of having a voice in TSP. A lack of the FRTIB offering a Roth TSP while 30% of the private sector is offering it. A total lack of service from the TSP and Scottrade got my business. Hell, the G fund only pays 2.75% and you can get a online bank to pay up to 3.5% on my money.

http://savingsaccounts.com/

JTH

12-16-2008, 09:55 PM

Hi Steve

My decision to stop contributing to the TSP had nothing to do with our current state of the economy. When the board decided to impose IFT limitations, my account became crippled and like others, I started losing money. I did not feel it was fair for them to change the rules after I had already invested thousands of dollars. I also considered the fact that as a military member, my contributions do not receive matching funds.

So I opened a ROTH IRA and no longer have to deal with IFT limitations or settling for End of Day prices. With a greater variety of ETFs and Stocks to choose from, setting stops and limits, I have more tools in my arsenal to protect my money.

Cheers...

wv-girl

12-17-2008, 09:21 AM

McDuck

12-17-2008, 05:50 PM

Bring back unlimited IFTs and contributions will increase.

Right On !

I use to contribution 10%, then after the IFT limits I dropped back to 5% (the minimum to still get the matching funds).

Silverbird

12-18-2008, 05:19 PM

People are really confused. Recently, I find new TSP members spreading their investments over all of the L funds and in G, F, S, C, and I. Obviously this is not what the L funds are for, L funds are being wrongly used, where is the education?

Big losses also have caused people to pull and run to G, and if you didn't pull back in first or second quarter, you just lost a bundle.

Although you're talking about tax-free dollars, TSP is not an especially good investment except for matching funds, at least until stocks start to show recovery. Doubly so if you have home equity loans or lowering balance available and rising interest credit cards, or need cash to buy something you usually would pay installments for - like a car, or in my case, a dishwasher since my current one failed.

Rod

12-18-2008, 08:39 PM

People are really confused. Recently, I find new TSP members spreading their investments over all of the L funds and in G, F, S, C, and I. Obviously this is not what the L funds are for, L funds are being wrongly used, where is the education?

These folks have to educate themselves. They are blindly diversifying their funds, and will get burnt.

As I discussed elsewhere, if you are confused you need to simply remain in (G) until you educate and empower yourself to responsibly invest in the TSP.

-Rod

Mike

12-19-2008, 02:31 AM

PessOptimist

12-19-2008, 03:04 AM

Since I got interested in trying to manage my TSP account, I have mentioned to coworkers that they should check out their account. Most do not know that they can go to tsp.gov and find answers. Most, do not know how to access their account, have never gotten a password and don't seem to know where their statements are. Some ask if they will get in trouble accessing the account at work. Some of these same people have no problem spending hours at work on my space or youtube.

I am not saying that the tsp.gov website is perfect, but it does explain the funds and show you where your money is going.

There are a lot of e-mails coming in to my agency about TSP and how to access it, reminders about the max contributions, changes, etc. There is no reasonable need for courses about how to use TSP. Unless you are in a position to get promoted and design/teach the course. The info is all available on line and most agencies send reminder e-mails about how to get there.

If fed employees would concentrate on the J.O.B and the their future instead of who got the promotion and what the employees association is doing next, the problem wouldn't exist.

Show-me

12-19-2008, 08:06 AM

Still now contact list for ETAC on the homepage, they don't want to be bothered. Love that representation, almost as bad as the government.

XL-entLady

12-19-2008, 08:09 AM

Offering up easily accessible educational courses on TSP funds and investing in general would do a world of good. While I agree with Rod that people "should educate themselves", the simple fact of the matter is most of them fail to do that. Maybe it's because they fear the complexity of the stock market, maybe it's due to lack of interest, or maybe it's due to laziness. Whatever the reason, most federal employees (and I would guess most people in general) are woefully uninformed when it comes to investing.
I know things differ from agency to agency, but my former agency (I'm retired) never mentioned the TSP. If we saw a TSP email it was a very occasional piece of spam that got through the junk mail filter. When I first started trying to educate myself I wasn't sure where to even start. That's why I had (still have :rolleyes:) some black holes in my knowledge base, even though I have a business and accounting background. Most people in my former agency don't even think about their TSP accounts. Sad.

Lady

peterson82

12-19-2008, 09:40 AM

Considering my retirement is eons away, I have increased my contribution %!

Frixxxx

12-19-2008, 09:54 AM

Considering my retirement is eons away, I have increased my contribution %!
Nice, DCA in your positions....I have a few years myself, but decided diversification would suit me better right now. I have two old 401k plans that I get to choose investment placements. That freedom keeps me out of the 5+% for TSP contirbutions. But, I get the wonderful tax right-offs still.

OBGibby

12-26-2008, 02:04 PM

I increased my TSP contributions, partly because of the weakening economy/cheaper stock prices.

I have NO sympathy for federal employees who don't take an active part in their own retirement (or any worker for that matter). Like most things in life, proper planning prevents **** poor performance (6 P's to live by!), and TSP or any other retirement accounts is no exception.

There is more than enough information online about retirement and the TSP - you can only take the horse to the water, you can't make 'em drink.

As far as opining about why folks stopped contributing to the TSP, I think the overwhelming majority of employees who stopped contributing were/are experiencing financial difficulties (like a lot of people in the current economy), and scaled back their spending. TSP contributions are "expenses" and some folks simply couldn't afford to pay for something that pays off in the future (for some people, in the way off future), when they have financial obligations that are due in the here and now. I think the percentage of TSP participants who used to actively trade prior to the IFT restrictions were enacted were a very small percentage of TSP participants, as such, I think the number of TSP participants who recently quit the TSP as a result is even smaller.

Just my two cents - your mileage may vary.

XL-entLady

12-26-2008, 02:36 PM

.... I have NO sympathy for federal employees who don't take an active part in their own retirement (or any worker for that matter). Like most things in life, proper planning prevents **** poor performance (6 P's to live by!), and TSP or any other retirement accounts is no exception.

There is more than enough information online about retirement and the TSP - you can only take the horse to the water, you can't make 'em drink....

Just my two cents - your mileage may vary.
Interesting opinion, OBGibby. I guess opinions are like noses; everybody has at least one. :cheesy:

While I agree that every federal employee has the responsibility to become as informed as possible about his/her retirement, I'm not quite in line with your statement about there being more than enough information online to do that job. Especially when the sketchy online TSP Fund investing information only reflects one viewpoint, that of buy-and-hold and "L Funds are best." Ask just about anyone how that strategy has been working for them this year. :blink:

And the HR people in my former agency are instructed to mention the party line viewpoint (B&H and LFunds) during new employee orientations. So if your agency officially tells you this is what you're supposed to do and you already have more duties than you have hours in the day, it is human nature to trust the instructions.

I absolutely agree with you that the majority of people who have lowered or suspended contributions have done it because of personal economic hardship. However, I also firmly believe that anyone who does as you advise and becomes informed about the TSP system and its pluses and minuses will put enough in their TSP accounts to receive their 5% matching and that's all. They will then put any additional spare dollars into an IRA or other instrument that can actually make some money in this bear market economy.

I'm just glad that I found this MB, and I tell every federal employee and retiree I know so that they, too, have the choice of informed and intelligent alternatives to the party line. :)

Lady

Show-me

12-26-2008, 02:42 PM

You all worry too much, the FRTIB, Greg Long, and Tracy Ray will provide all the guidance you need when they think you need it. Empty your minds and think of other things like butterflies and luxurious retirement destinations. They are looking out for us all and will protect us all from ourselves by limiting the number of evil interfund transfers so that you, like the other 99.99% of the sheep will be protected in a extremely lucrative buy and hold strategy.:worried:

Don't ya feel all warm and fuzzy knowing they are on our side and doing what is best for us.:D

Thanks FRTIB and you TSP.gov geniuses!

XL-entLady

12-26-2008, 02:59 PM

Good one, Show-Me! :D

Lady

OBGibby

12-26-2008, 03:23 PM

Lady -

I'm not knocking active traders (whether TSP or elsewhere), but for my retirement goals, coupled with my knowledge of the markets and investing, I am satistified with the TSP and I anticipate continuing to use it as a vehicle towards partial fulfillment of my retirement goals. But hey, different strokes for different folks.

I suspect most TSP participants, as well as most 401K and IRA participants in the private sector, subscribe to the buy and hold strategy for one simple reason: they don't have the time to become well versed enough in investing to actively trade, and actively trade profitably.

I've worked for three different federal agencies - and all three have been hands-off about TSP participation, contribution amounts and allocations. All have uniformly been insistent in advising their employees of the importance of TSP as it relates to FERS, but the onus has always been placed on the individual employee to decide what fits best for their respective retirement goals. As far as knowledge of the TSP by my colleagues, nearly all have been active in learning about the TSP and using it in their overall retirement goals. One agency even provided an eight hour retirement seminar (run by an outside contractor) to all new employees on day one in order to encourage the new employees to lay the foundation for their retirements as early as possible. I understand that this type of proactive HR effort is not the norm, but not every federal agency or every federal employee is being hoodwinked by their HR or by TSP in general.

I think the problem with federal employees not leveraging TSP (and a proper definition of that is in the eye of the beholder) is not a result of TSP education (or lack thereof), or HR managers pushing certain funds, or whatever - and it's not confined to federal employees only - is that most people aren't thinking that far ahead to prepare themselves for the reality of retirement, whether their public or private sector. Let's face it, we live in an instant gratification society, more concerned with what I can get now, rather than be concerned with the consequences of my short-term actions might have on my long-term.

XL-entLady

12-26-2008, 04:31 PM

OBGibby, your opinions are well-presented. My cranky responses are probably brought on partly by my current bout with whooping cough. But they are also partly a result of my concern that I had to take a medical retirement in 2008 and the TSP rules may not enable me to make my account last the many years that it will have to.

For example, we just had a significant bear market rally. I was able to catch about 2% gain from that rally. But if I had been able to make unlimited IFTs in real market time I would have made changes that would have netted me a 10% gain. (I don't know why I track that stuff. It makes me nuts. And driving me nuts is a short trip these days.)

Anyway, that is the basis of my frustration, and also the reason why I will be changing my account to an IRA as soon as the market stabilizes to a point where I dare leave "full faith and credit" backing.

Lady

OBGibby

12-27-2008, 01:27 AM

Lady -

I hope the difficult times you're currently experiencing are soon taken over by better ones. Even though the IFT issue and active trading don't figure prominently in my retirement goals (as of right now), I do appreciate the frustration you and the other proponents of unlimited IFT's feel over the recent decision to limit the IFT's. There should have been more of a lead time given before enactment, and some provision should have been made to allow TSP participants to shift their money to non-TSP accounts, if they so desired, without penalty as a result of the changes.

Get well soon!

Spaf

12-27-2008, 03:40 PM

XL-entLady

12-27-2008, 04:04 PM

Amen, Spaf, amen!

They didn't just change the rules of the game on us. The IFT limit changed the whole game for a swing trader. We thought we were playing chess and ended up playing checkers.

Lady

OBGibby

12-28-2008, 07:21 AM

Speaking as a member.

There is a matter of contention.

It deals with CRS vs FERS and Management vs Employees. Some may even want to add the Union in on this one!

Members, especially those in FERS should not be satisfied with TSP. By limiting Inter Fund Transfers they have abridged your right to manage your account, in short; discrimination.

To clarify. In day trading no security is held overnight, and impossable to do with TSP. Swing traders hold positions for days or weeks. Position traders for weeks, months, years or more.

The concept of buying and holding forever died after the stock crash of 2000. While some investors may use a buy and hold strategy they look much more critically at what they are holding and are more likely to change their holdings. Hence the position trader, holding for weeks, months and maybe a year or more depending on trends in the economy, the market, and individual funds. The L-Funds of TSP can some what be thought of as position trades as one goes through the years to retirement.

The reason TSP members may not be versed in investing, is flately an omission by management to afford the necessary skills. Education in investing should begin the first year of employment, with annual updates thereafter. Remember, TSP is no longer a "savings" program once out of the G-Fund. However, management will provide for TSP investing education, once it becomes "important" to them. TSP is an option to many in management, remember they are mostly under CRS, not FERS. They do not have to manage investments in completing their retirement goals.

Spaf -

Nearly all employees of my agency, to include management, are covered under FERS, and therefore have a vested interest in the TSP. The government is not obligated, nor should they be in my opinion, to "educate" employees of the pros and cons of investing, and/or the finer working details of the TSP. The onus clearly rests on the employee to make his or her own decisions, whether publicly or privately employed. The last thing I want are our tax dollars being used for is for "educating" the mass of the federal workforce; I'd rather those tax dollars be spent productively for the benefit of those we serve - the American people.

I also respectively disagree with the notion that FERS employees should be dissatisfied with the TSP. I think a lot of federal employees who have established retirement goals and are active in preparing to reach said goals are satisfied with the TSP, and particularly enjoy the low administrative costs associated with the TSP. I think there is a misperception among some active traders that anyone who doesn't actively trade is uninformed, uneducated, or as some seem to imply, intentionally misinformed about investing options. While I agree there are scores of TSP participants that are woefully uninformed of how TSP works, and how the TSP can potentially be a major player in their respective retirement, on the balance I think most TSP participants know what is going on and willfully choose the passive investment route because it fits well into their investment/retirement goals, primarily because of their accepted risk tolerance.

I have been with Uncle Sugar since 1999, and a TSP participant since eligibility. Obviously, I haven't been around since the inception of the TSP, but unless I'm missing something, the TSP was never designed nor intended to be an investing vehicle akin to an active brokerage account. (I'd be interested to know how IFT's were accomplished prior to the TSP website IFT capability)

The restrictions on the IFT's to just two a month is sufficient for a lot of TSP participants' investing plans, wherein only periodic IFT's are needed to satisfy their respective rebalancing amongst their chosen funds. Assuming that active trading incurs additional expense to the TSP, and that that assumed additional expense is then borne by all participants of the TSP, is something that I don't really find quite fair. Why should passive participants, who by definition generally do very few IFT's, have to sharer the cost for those that actively trade? Now, I am assuming that there are additional costs - if not, please advise.

XL-entLady

12-28-2008, 08:59 AM

OBGibby, it appears from your posts that you work for a progressive agency and with well-informed co-workers. I congratulate you for that.

My own experience was somewhat different. I got my permanent status 6 days too late to be a CSRS employee. FERS is a great retirement program if you work for the government for a while and then leave for private industry, because it is portable. But it can be a challenge too.

In my case, my agency was not a progressive one and there was institutional unhappiness with FERS because of the added personal services costs. Until my last decade of work, people in management positions were CSRS and could plan that they would get x% of their active duty pay in retirement with their TSP accounts just being pin money. I tried to get information about the TSP and before the advent of the website, the information available to me was a couple of pages of handouts that told what TSP was but not much about how to use the funds to my advantage.

I attended one government sponsored retirement seminar in my years of service, in 1999. That seminar spent about an hour on TSP accounts, and my notes from that hour contain such platitudes as, "Stocks have done better than any other investment in any decade since inception, including any decade that includes 1929." In that seminar we were told to leave half our TSP account in G and put half in C and forget about our account until we were within 5 years of retirement, then to move 10% per year from C to G so that it was all in G when we retired. So I did what the expert said.

I looked at my yearly statements in 200 and 2001 with concern but still held to the party line. Finally in 2002, I decided that as little as I knew about things, I apparently knew more than the expert who had advised us in 1999. By that time, C Fund had dropped by 40% over the last three years while F Fund had gained 30% over those same three years, for a 70% difference.

I gradually became a swing trader and have been able to beat the markets in each of the last six years. But now I am one of the first FERS retirees and am struggling with the challenge of a TSP account that (although sizeable) is not big enough to last decades unless I can figure out how to preserve capital instead of drawing it down.

I do not think I was intentionally misinformed about my TSP account in my active duty years. I think that in the rural outposts where I spent the first two decades of my service, nobody was informed and general information has only been available for the last decade or so.

I do not think it is fair for TSP investors (people who buy-n-hold) to stand the costs for the IFTs of the TSP traders. But a "per IFT" charge against a TSP account for any IFTs over those currently allowed would be a simple solution to that problem. As it stands now, I educated myself about swing trading so that I would know how to make my account last the way I need it to, and then the rules changed so that I can't do that. I'm not given any options except like it or leave. How fair is that?

It is probable that as more management types begin to retire under FERS and realize the challenges, the rules will change to allow real time trades and to be able to buy trades as needed. I hope there is still enough of my TSP account left at that point that it still matters to me.

Lady

OBGibby

12-28-2008, 09:54 AM

James48843

12-28-2008, 12:49 PM

Lady -

I agree that additional IFT's should be available on a per-cost basis. Do you, or anyone else, know what the industry average would be in terms of cost per trade?

Additionally, what options do you (Lady) have relative to rolling your entire balance over to an IRA? Would it be worth it to you to transfer your funds, even if penalties were involved?

OBgibby:

You ask "Do you know what the industry average would be in terms of cost per trade?"

The answer to that is- it should have nothing to do with "industry average". It should be based on actual costs instead.

For example- the TSP has an annual cost of about 3 basis points to manage all of the more than $200 billion dollars. That includes costs for trades, costs for administration, the call center, employees, etc.
That cost has been heading down since the plan's inception.

The industry average is, on the other hand, more like 65 to 80 basis points for administrative fees. So, you see, comparing the costs in TSP to "industry average" to set prices is not valid.

Now, when you look at actual costs, it's on the order of around $6 per trade. That's from the TSP Thrift Board's own data. The cost for trading the I fund is higher than the others, because some countries (notably ireland, at 1%) impose a transfer tax on each stock trade. However, the C fund (S&P 500) has exceptionally low costs-- pennies on the trade. So, anyway, it averages out to less than $6 a trade overall.

Now, should people be allowed to manage their own money? Absolutely. Since we put the burden on people to control their own retirement when CSRS was changed, we owe each employee: 1. Educational opportunities, so that they understand how the system works, and 2. A free market in which to exercise their own values, education, and goals.

Sure, some people are "buy and hold". If they know what they are doing, and are making a conscious decision to be "buy and holders", then more power to them.

On the other hand, if someone wishes to take a different amount of risk, then they should be allowed to use the full power of the TSP system to their own benefit.

You ask "Would it be worth it to transfer your funds, even if penalties are involved?"

The answer to that is- it depends. For someone who has successfully amassed a significant balance, and who is able to move funds regularly in a new account, then yes, it very well may be.

Except under TSP, the only way to be able to move funds away from the TSP is to separate from your job. And many are now considering doing that, just to have that freedom to invest as they see fit.

The total cost of all trades in 2007 was on the order of 23 million dollars. That's on tens of billions moved. If they had a $5 fee, they would be able to easily cover the costs involved, and everyone I know who used to manage their own money would not object to a $5 fee.

Except that is beyond the thinking of the Thrift Board, and Tracy Ray's mentality of "buy and hold".

You asked "What did we do before the website for trades?"

The answer is- we only could trade once per month.

Then we invested hundreds of millions of our dollars- TSP member dollars- to build a system that provided for a daily valuation and execution of trades.

and then the Thrift Board negated that hundreds of million dollar investment, by turning the clock backwards and locking us out.

XL-entLady

12-28-2008, 12:54 PM

Spaf

12-28-2008, 01:45 PM

Spaf -

Nearly all employees of my agency, to include management, are covered under FERS, and therefore have a vested interest in the TSP. The government is not obligated, nor should they be in my opinion, to "educate" employees of the pros and cons of investing, and/or the finer working details of the TSP. The onus clearly rests on the employee to make his or her own decisions, whether publicly or privately employed. The last thing I want are our tax dollars being used for is for "educating" the mass of the federal workforce; I'd rather those tax dollars be spent productively for the benefit of those we serve - the American people.

I also respectively disagree with the notion that FERS employees should be dissatisfied with the TSP. I think a lot of federal employees who have established retirement goals and are active in preparing to reach said goals are satisfied with the TSP, and particularly enjoy the low administrative costs associated with the TSP. I think there is a misperception among some active traders that anyone who doesn't actively trade is uninformed, uneducated, or as some seem to imply, intentionally misinformed about investing options. While I agree there are scores of TSP participants that are woefully uninformed of how TSP works, and how the TSP can potentially be a major player in their respective retirement, on the balance I think most TSP participants know what is going on and willfully choose the passive investment route because it fits well into their investment/retirement goals, primarily because of their accepted risk tolerance.

I have been with Uncle Sugar since 1999, and a TSP participant since eligibility. Obviously, I haven't been around since the inception of the TSP, but unless I'm missing something, the TSP was never designed nor intended to be an investing vehicle akin to an active brokerage account. (I'd be interested to know how IFT's were accomplished prior to the TSP website IFT capability)

The restrictions on the IFT's to just two a month is sufficient for a lot of TSP participants' investing plans, wherein only periodic IFT's are needed to satisfy their respective rebalancing amongst their chosen funds. Assuming that active trading incurs additional expense to the TSP, and that that assumed additional expense is then borne by all participants of the TSP, is something that I don't really find quite fair. Why should passive participants, who by definition generally do very few IFT's, have to sharer the cost for those that actively trade? Now, I am assuming that there are additional costs - if not, please advise.

Well, a specific reply to me......:D

Answer: OB, sorry, I can't agree with you!

Maybe we should go back and re-read what Steve said in his post # 1. for this thread..... "I wrote this story yesterday on data showing that thousands of TSP participants are deciding to stop putting their money in the plan......"

RE: Post and Story ----> http://www.tsptalk.com/mb/showpost.php?p=199081&postcount=1

In your quote I seem to get that you don't want to use tax dollars to educate TSP participants because most participants willfully choose the passive investment route and assume the risk. And, participant traders are assumed to create excessive expenses from frequent Inter Fund Transfers, IFT's.

Normally, You will find me silent on various opinions and issues. However, your specific reply did deserve an answer.

In respect
S

OBGibby

12-28-2008, 03:04 PM

James/Lady -

Thanks for the information. I was more specifically inquiring as to the average price for transactions within TSP-like progams, such as similar IRA's and 401K's, but your numbers were informative nonetheless. I agree with the notion that any cost attached to a TSP transaction should reflect an accurate transactional cost incurred by the TSP. Can you point me in the right direction regarding how the upgrades to TSP you mentioned where financed? And, how long ago did the once a month IFT change with the addition of the web-based unlimited IFT's, before reverting to the current two-a-month IFT?

Spaf - In my earlier post I advocated not having the government expending resources unnecessarily on educating federal employees on the benefits of controlling major portions of their retirement. My position is irrespective on whether a federal employee is an active trader or a passive investor. It has been my experience that the current guidance given by government agencies to their employees is sufficient. At some point individuals have to take personal responsibility for their own futures, and Uncle Sugar cannot and should not be the omnipresent force for all things, to all people.

James48843

12-28-2008, 10:18 PM

James/Lady -

It has been my experience that the current guidance given by government agencies to their employees is sufficient. At some point individuals have to take personal responsibility for their own futures, and Uncle Sugar cannot and should not be the omnipresent force for all things, to all people.

I have worked for the federal government since 1992. I have never received any training or information about the TSP, with the exception of a couple of flyers telling me is was "open season" in 1993 and 1994. And, of course, the infamous $4 million dollar CD distributed to all TSP holders in 2006.

Nothing. Nada. Ziltch.

That is par for the course at my agency.

James48843

12-28-2008, 10:30 PM

James/Lady -

Thanks for the information. I was more specifically inquiring as to the average price for transactions within TSP-like progams, such as similar IRA's and 401K's, but your numbers were informative nonetheless. I agree with the notion that any cost attached to a TSP transaction should reflect an accurate transactional cost incurred by the TSP. Can you point me in the right direction regarding how the upgrades to TSP you mentioned where financed? And, how long ago did the once a month IFT change with the addition of the web-based unlimited IFT's, before reverting to the current two-a-month IFT?
.

The system was changed to unlimited IFT's in 2003, after a five year blown program with two different contractors. YOU are paying for the new system, and for the fialed contractors attempt. Read this: http://govexec.com/story_page.cfm?filepath=/dailyfed/0603/062303t1.htm

There was a legal battle over the cost over runs from the first contractor, AMS, which was hired in 1997 to create the new system. They were fired in 2001 after huge cost over runs, and failed software code. They turned around and sued TSP for $350 million. It took two more years and 40+ million more dollars to come up with the system we have today, which allowed unlimited moves.

Up until, that it, the current Thrift Board took that away.

Here is another article on the changes, from the summer of 2002:

http://govexec.com/story_page.cfm?filepath=/dailyfed/0502/051702b1.htm

James48843

12-28-2008, 10:35 PM

ANd here is another article about what happened when the went to the new system:

http://www.govexec.com/story_page.cfm?filepath=/dailyfed/0803/081803t1.htm

By the way- that article mentions that is costs $6 million per year to mail participant statements back in 2002. I would think that now that number probably is much higher due to postal service rate hikes. However, the costs involved in ALL the frequent trading were lower than the costs to mail participant statements. Yet Tracey Ray and Greg Long decided that the costs were "too high" to allow us to control our own money.

Sorry I ramble- but this is a sensitive topic for me.

I don't like having to invest hundreds of millions of dollars for a system, only to have someone later come along and decide that they know better how I should handle my money, and then negating the investment that WE are still paying for.

OBGibby

12-29-2008, 01:16 AM

James -

No need to apologize for the rant or your passion for the subject at hand. As I've stated before, I do appreciate the point of view you and others hold, I just don't necessarily agree with it.

In an earlier post you mentioned that the TSP spent hundreds of millions of dollars to upgrade the computer systems, and that those costs were than passed on to the TSP participants. The articles you linked identified significant amounts passed on to participants, but not nearly in the ballpark of hundreds of millions. What am I missing? I'm not too proud to admit my ignorance or my inability to read between lines!

If I have this right, prior to 2003, TSP participants were limited to only one IFT per month, or twelve per year. The new system comes on-line, and unlimited IFT's were permitted. In 2008, the IFT's were limited to basically two per month. So, we're back to square one, which on the face of it smacks of unfairness and regressive policy. However, on the flip side, when the unlimited IFT's came on-line as a result of the new computer system, it was never intended to facilitate unlimited active trading. While it is true the computer system may functionally be able to handle active trading, the costs involved with active traders appear to outweigh the benefit to the TSP participants as a whole (at the current no cost per trade basis).

I'm still inclined to think that most 401Ks restrict or impose fees to discourage active trading - not because it's some evil conspiracy on the part of the respective 401K board, or stems from, as some would have us believe, the incompetence of the 401K board, but because it's costly to plan participants as a whole and detrimental to the long-term investment returns of the vast majority of the plan participants.

James48843

12-29-2008, 01:46 AM

James -
However, on the flip side, when the unlimited IFT's came on-line as a result of the new computer system, it was never intended to facilitate unlimited active trading. While it is true the computer system may functionally be able to handle active trading, the costs involved with active traders appear to outweigh the benefit to the TSP participants as a whole (at the current no cost per trade basis).

Wrong. It was DESIGNED to allow unlimited IFTs. That was a software design requirement. IT was required to handle up to one trade PER DAY per TSP shareholder. Along with the ability to cancel trades, or change trades. It was in the software requirements document in 1997.

"...costs involved with active trading..." Let me clear this up again- the costs are minute. Small, tiny. In some cases, they actually MAKE money by trading- not COSTING money to trade.

99% of the costs do not exist. That's because the system balances, in the computer, WITH THE TSP - those selling and those buying each day, BEFORE the net bulk order goes out to Barclays to buy or sell certain numbers of shares.

Let's say 1,000 want to sell today. THey want to sell evey single share of S&P 500 they own. And then let's say 900 want to BUY today.

There are not 1,900 buy and sell transactions that take place. 900 of the buyers and sellers are matched on the computer software between noon and 2:30 each day. And so there is NO COST to the TSP for them.

That leaves only the actions of 100, out of 1,900 trades, that will actually have to be executed on the open market.

And it isn't 100 individual transactions that take place. It's ONE transaction, of 100 shares, that takes place, between 2:30 p.m. and 4 p.m.

As far as the TSP is concened, it doesn't cost any more if they are buying 1,000,000 shares, or 100,000 shares. It's ONE transaction.

OK- there is incremental costs, pennies, actually, in the difference between trading a million shares, and trading 100,000 shares. Barclays has it down to a science, and , in a falling market, buys shares late, or sells shares early in the 2:30 to 4 p.m. period. IN a rising market, they do the opposite. The "Value" is placed on the trades at 4 pm.

Barclays makes MILLIONS of dollars on some days on this movement.

they lose a little on other days.

But overall, they win big.

The actual NET costs are reported in the monthly printouts as "tracking error".

For example, in October, the "tracking error" was reported in the monthly minutes as follows:

The Barclays Extended Equity Market Fund E underperformed by 47
basis points in October and outperformed by 35 basis points
year-to-date. The performance difference is primarily related to
the sampling technique used by the Fund. The Barclay’s EAFE
Equity Index Fund E underperformed by 40 basis points in October
primarily because of a fair valuation adjustment on September
30. The Barclays U.S. Debt Index Fund E has outperformed by 12
basis points in 2008, primarily as a result of the sampling
technique used by the Fund.

Here is a breakdown of the trading costs for the month of October. Now, remember, October 2008 was pretty wild. Lots of people moved funds.

5305

As you can see, some 2 BILLION dollars was traded in the C fund in October 2008.

And the total cost to execute all those trades? Just $223 thousand dollars.

That means it that cost $1 to trade each $10,620 of funds traded into or out of the C fund in October.

And the I fund? Well, because of what I just explained, costs for trading the I fund were actually NEGATIVE for October, 2008.

In October 1.538 BILLION dollars was traded. And it resulted in NEGATIVE costs of more than $8 MILLION. That means $8 million in EXTRA profit for I fund holders during that time. Meaning that the I fund MADE $1 profit for each $173 dollars traded.

If there had been unlimited trades in October, and the I fund had moved the same volume as in October 2007, you can bet there would have been a lot MORE money made.

James48843

12-29-2008, 01:55 AM

Now, compare the costs for 2007 with the costs for 2008.

Look carefully. Compare each grouping.

First, let's look at the total amount of funds traded in 2007 vs. 2008. Remember, the new rules went into effect in April, but the Board pulled the trading privileges of thousands of us in February:

5306

James48843

12-29-2008, 02:00 AM

Now here are the actual costs of trading:

IN 2007:

5307

ANd then the same period in 2008: AFTER they imposed trading limits.

5308

See much difference?

In all except the I fund, on both REAL TOTAL COSTS, and on "basis points" costs were WORSE, not better, after they imposed the trading limits.

In the I fund, the $8 million that was made in October could have been MUCH HIGHER had they allowed unlimited trades. That's a function of whether the markets ended up lower or higher on the overnight- something that the trading limits did not address. But TSP shareholders in general would have been MILLIONS OF DOLLARS better off had they allowed unlimited trades.

Now are you getting the picture?

Trading limits had nothing to do with costs.

It had everything to do with the TSP staff and the Thrift Board imposing THEIR investing management style opinions on the rest of us.

It was about CONTROL.

Nothing else.

OBGibby

12-29-2008, 02:12 AM

James -

Lots of information - thank you. Gonna need some time digest it.

James48843

12-29-2008, 02:13 AM

Now,I don't blame Tracey Ray and Greg Long from doing what they thought at the time was in the best interest of shareholders.

I think what is clear now, though, is that it IS in the best interests of shareholders to allow unlimited trades. And it is now a good time to go back to the Thrift Board under the new Administration, and ask them to reconsider the limits that are in place.

Either by regulation, which is within the control of the Thrift Board and Staff of TSP, or by Congressional law change. That can be done too.

Either way, it needs to be looked at again, and , when the actual data is shown, the Board needs to change the policy back to more reasonable numbers.

Five trades per month instead of two?

Or maybe unlimited, with a $10 fee.

Either way would be a great improvement from where we are today.

Show-me

12-29-2008, 07:14 AM

Isn't great how ETAC still hides in the shadows. What representation!

oncken

12-29-2008, 02:40 PM

I have actually increased my contributions since the market has self destructed. I figure that the lower the stock price the more shares I get. I do agree that later on when the stocks rebound, albeit 10 years from now, I can take the profit and reinvest it.
:cool:

OBGibby

12-29-2008, 02:41 PM

James -

The new system may have been designed to handled unlimited IFT's by everyone, but I don't think it was intended to. Sort of like the "worst case scenario" capability built into the system.

Your argument is certainly persuasive after reviewing your statistics and graphs. From the numbers presented, the amount traded in the I Fund in October 2008 (for example) is significantly lower than the amount traded the previous October, when IFT's were unlimited. Assuming that the bulk of the October 2008 trading of the I Fund was more "institutional," vice participant-driven IFT activity, could that not affect the amount of the trading costs for that particular month? What other variables would affect the trading costs for a particular month for a particular fund? Is the current economic climate having an affect - would the numbers replicate themselves in a bull market? What other consequences of unlimited IFT's would be present - forcing the fund manager (is that the right term for the TSP) to maintain more cash on hand ?

Don't a great many private sector 401K's impose much harsher restrictions and/or fees on active trading? I realize that I'm no expert, but if what seems like a majority of 401K discourage active trading, can they all be wrong?

And if the TSP C, S, and I Funds are basically supposed to mirror their benchmark indexes, how does a high rate of IFT's affect the fund manager's ability to accurately mirror the index if daily changes to the fund are occurring through IFT's (is there even an affect?)?

The more I learn the more questions I have. Continue to stoke my curiosity at your leisure...

James48843

12-29-2008, 06:02 PM

Too many questions all at once. Let's try and take them apart, one at a time.

Assuming that the bulk of the October 2008 trading of the I Fund was more "institutional," vice participant-driven IFT activity, could that not affect the amount of the trading costs for that particular month? What other variables would affect the trading costs for a particular month for a particular fund?First, there is no such thing as "institutional" trading activity in TSP. No institutions own shares in TSP. It is only individual share holders who own shares.

Now, put this in your mind as well. Barclays is the agent which executes trades into and out of actual shares of stock. Remember, the only time Barclays gets involved is when there are MORE sellers than buyers, or visa versa. Otherwise, it's all handled in-house. If there are more buyers than sellers, (or reverse), then an order is placed at 2:30 each day to Barclays.

Barclays has two choices. Choice 1- they can meet the demand within their OWN system. Barclays keeps a slush fund of cash and shares within Barclays to address demand. Under SEC rules, there is a three-day clearning time frame, so Barclays typically keeps somewhere on the order of one billion dollars in both stock shares and liquid cash. If the fund managers at Barclays decide they can fill the order from within their own holdings, they can do that.

Note: TSP has no "fund managers". TSP only has order takers, no assets, and computer processing people. Barclays holds the cash, and shares.

Choice 2- IF the amount of the order exceeds the ability of Barclays to cover in house, they have to go out on the open market and buy or sell shares to cover the amount of orders placed. In this case, there are micro-fees associated. By Micro, I mean that yes, there is a "handling charge" associated with the brokers who are doing the buying and selling. If the order is, say, "BUY 24 million dollars of S&P 500", then there is a broker's charge for the exchange. The amount is TINY compared to the actual volume traded. You or I could not get the kind of rates and fees that Barclays gets on doing a 24 million dollar trade.

IN the month shown above (October 2008), Barclays traded 2.3 BILLION dollars in the S&P 500 ("C" fund) . That was spread over roughly 23 trading days. (23 executions of trades). It cost them a grand total of 223 THOUSAND dollars to execute all those trades. That works out to $1 in trading costs, for each $10,620 of shares traded during the month.

If I had $106,200 in a C fund trade, it would have cost the TSP a total of $10 to execute that trade.

The entire amount of variable trading costs rest within how Barclays executes the order.

IF they cover in-house, there is no expense at all.

IF they have to go out on the open market, then there is a small fee associated.

There is one more varible involved- that is "time".

They have to declare a share value each day. That's a whole differnet discussion, which doesn't need to be done here. Suffice it to say that the TSP has chosen to declare a "value" at 4 pm. each day.

But the trades don't occur at exactly 4 pm. The trades occur in the time between when Barclays get the order at 2:30 each day, and the market closing at 4 pm.

The Barclays fund managers get to decide whether to do it at 2:35 pm, or 3:58 p.m. Let say today Barclays gets a "sell order" of 100 million shares.

Now, in a falling market day, the fund manager would be smart, and execute the trade at 2:35 pm. Let's say he is right, and the market falls another 1 percent between 2:35 p.m. and 4 p.m.

The stocks were sold when the values were one percent higher then they were at the close. So there is "extra money" all of a sudden.

So, what happens to that windfall money?

Some of it is paid out in bonuses:
http://www.independent.co.uk/news/business/news/barclays-bonus-review-as-bank-seeks-uae-cash-1002752.html

Some of it is retained in the slush fund, to offset days when the fund manager misses the mark.

That brings us around to something called "Tracking Error" - something I'll cover in a future post.

Sometimes tracking error is in favor of shareholders, sometimes its against share holders.

The I fund is slightly different. The value is declared at 4 pm. But the trades are not actually executed until overnight- when the foreign markets open up and trades are made. The last market to open is FSTE, which opens at about 6 am. eastern time the following morning. It's crapshoot, because FTRIB doesn't set the value at 7 am the next morning. If they did, that would eliminate 95% of the varible costs of the I fund trades. We suggested that in the filings we did during the comment period of the trading restrictions. They didn't listen to us.

The "I" fund MADE money in October, 2008, because the value was set at 4 pm, and,. on a couple of days, the markets tanked or rose more than the fund manager expected. It turned out to be in the favor of shareholders by $8 million dollars.

But it could have gone the other way.

But still, the amount is tiny- minescule, compared to other investment vehicles. The way Barclays handles the slush fund ensures that. Barclays is very, very good at handling that slush fund.

James48843

12-29-2008, 06:11 PM

Is the current economic climate having an affect - would the numbers replicate themselves in a bull market?

Yes, to the extent that there are larger than historically normal markets swings right now. If the swings were smaller, than the costs may be slightly higher, because there is less cushion for the Barclays fund manager to play with. Again, it's a crap shoot depending on how well the Barclays fund mangers project the market is going during each trading session, and whether or not they execute early or late.

What is more important is not whether the market is BULL or BEAR, but whether the size of the swing is large or small. A good fund manager can make more money either way when the swing it larger. The problem is making sure you are right more times than you are wrong.

You don't have to be right every time. they only count the money at the end of the month. You just have to be right more times than you are wrong. One bad big swing call, and you could blow a whole month of good little calls.

But again- and I don't know how many times I have to say this for it to sink in- we are talking a FRACTION of the costs as any private sector plan. TSP runs on operating costs of about 3 basis points a year. Private funds run on 60 to 80 basis points on a regular "norm". So if it ends up being 4 basis points instead of 3 basis points, we really should be very, very happy still. that's the part most TSP holders don't understand. It DOESN'T MATTER if they are off by a tiny fraction. Barclays guys are right more than they are wrong, and the larger the amount being traded, the better off they are at hitting the slush fund money in the right direction.

For October 2008, you see the number of just over $8 million in profit from the slush fund. In 2008, two-third fewer shares were traded than in October 2007.

If the same number of shares had been traded in 2008 as in 2007, that profit would have been three times that- or about $24 million.

James48843

12-29-2008, 06:27 PM

Gibby: Don't a great many private sector 401K's impose much harsher restrictions and/or fees on active trading? I realize that I'm no expert, but if what seems like a majority of 401K discourage active trading, can they all be wrong?Can they all be wrong? Yes.

They are discouraging active trading, as a reaction to an SEC rule that was issued after a Mutual fund scandal a few years back.

IN that case, one mutual fund started declaring "value" only once a week or so, and was funneling money to friends on the differences. There were two classes of share holders. those that got inside information, and those that didn't. those that did got huge profits when they traded after insiders tipped them off that the valuation was wrong, and that they were going to have a revaluation in a day or two. That allowed these big money insiders to rip off the common man. The insiders knew when things weren't right,and money was about to be made.

Of course, the SEC over-reacted, and laid down a rule that said all funds must declare a value once per day (a valid rule) AND that trading was to be discouraged (a NOT valid rule as it applied to the rest of the financial industry).

See http://www.filife.com/stories/mutual-fund-scandal-spawns-new-rules

These types of rules shouldn't apply when there is only ONE class of investor (Us).

And they shouldn't apply when the shares are valued every day. (Like they are with TSP funds.)

But the industry agreed to the SEC rules to prevent more harsh rules from being imposed, so here we are.

Those SEC rules, by the way, DON'T apply to the TSP. They only apply to mutual funds. TSP is NOT a mutual fund.

James48843

12-29-2008, 06:44 PM

Gibby: And if the TSP C, S, and I Funds are basically supposed to mirror their benchmark indexes, how does a high rate of IFT's affect the fund manager's ability to accurately mirror the index if daily changes to the fund are occurring through IFT's (is there even an affect?)? And THAT is the ONLY GOOD, VALID question that needs to be asked.

You are BINGO dead on with that question.

The TSP will be "successful" IF it is able to replicate the index that the fund is supposed to represent.

The goal is to be as close as possible to that index. If it hits exactly, then it has met it's objective, and is doing exactly what it is intended to do.

When TSP first started back in 1987, it was often OFF the mark. Wells Fargo was the first transfer agent, and missed the mark. That first year it was a struggle to match the market. here is the actual data from 1988.

5314

As time went on, the tracking got better.

After a while, the transfer agent changed to Barclays, and Barclays has improved the tracking of the index ever since.

Last year, in the January to October time period, here is what the tracking was, with "unlimited trades":

In 2007, the S&P 500, from January 2007 till September 2007, gained 9.13% The C fund gained 9.16% at the same time. They BEAT the GOAL by 0.03%.

With unlimited trades.

In 2007, the Wilshire 4500 index, from January 2007 till September 2007, gained 8.97%. The S fund gained 9.12% in that same time. They BEAT the GOAL by 0.15%.

With unlimited trades.

And in 2007, the EFAE International Index, from January 2007 till September 2007, gained an impressive 13.15%.
The I fund, during that same period, gained 13.37%, beating the goal by an impressive 0.22%.

With unlimited trades.

James48843

12-29-2008, 06:55 PM

And this year, now that they have LIMITED TRADES TO TWO PER MONTH- \
Here is the tracking data, January through October 2008:

5315

Each of the funds has slightly beating the index it represents, in a time when we've had a MAJOR market contraction. the funds would have done better than that, in my opinion, had unlimited trades been in effect. Of course, we'll never know now, because the Thrift Boad took that option away.

In my opinion, "success" is defined when the funds meet or beat the indexes. If they can do that, then there should never be a restriction on trades.

Barclays has shown they are able to do that. They did it last year without limits, and they are doing it now with limits. In short, TSP is a success when they can meet the index. Anything above that is gravy.

Please digest that for a while, and then feel free to ask any more questions-

But try and keep the number of questions per post to one or two- it makes it easier for us to research and answer that way.

thanks.

pogo

12-29-2008, 08:03 PM

BRAVO!!!!!!! BRAVO!!!!!!! now you get me pissed off all over again. James you are the man

tsptalk

12-29-2008, 11:57 PM

Great info James!

tsptalk

12-30-2008, 12:08 AM

Trading limits had nothing to do with costs.

It had everything to do with the TSP staff and the Thrift Board imposing THEIR investing management style opinions on the rest of us.

It was about CONTROL.

Nothing else.

I think we need to get 60 Minutes over to James's house.

OBGibby

12-30-2008, 12:36 AM

James -

If the costs associated with unlimited IFT's are miniscule, and a fraction of what private plans incur for similar activity, how do the costs change (assuming unlimited IFT's were in effect) if more TSP participants were actively trading?

I would think at some point as more participants conduct frequent IFT's the transactional costs would increase, and the ability of the fund manager/TSP/Barclays (whoever) to accurately mirror the benchmark indexes would be impacted. If the costs were low when less than 1% of TSP participants were actively trading, what happens when, say, 5%, 10% or 25% actively trade?

At what point is there too much play in the system where it produces negative consequences to the bulk of the TSP investors who are more long-term oriented (i.e., B&A's)?

OBGibby

12-30-2008, 12:41 AM

First, there is no such thing as "institutional" trading activity in TSP. No institutions own shares in TSP. It is only individual share holders who own shares.

What I meant by "institutional" trading activity was the management of the fund to mirror the index, in accordance with more regular trading activity balance the fund to match the index, while taking into account contributions and redemptions. The normal trading activity excluding active trading.

James48843

12-30-2008, 07:36 AM

James - At what point is there too much play in the system where it produces negative consequences to the bulk of the TSP investors who are more long-term oriented (i.e., B&A's)?

The only point where there needs to be any concern whatsoever, is if it begins to affect returns BELOW what the index is. I.E.- if the amount of trading causes the fund to NOT be able to mirror the index.

As shown above- we are a long ways away from that point. If Barclays is able to properly manage matching the index, then there is "success" in the plan. All indications are that Barclays has been able to match the fund indexes, and then some. As you can see in times of larger variations in the market (EITHER up or down), then Barclays has been effective in exceeding the Index they represent.

My arguement would be that in a free society, we should be able to exercise that right, right up until the point where they are not able to meet that goal. THEN, and only THEN, should any type of a charge to trade be considered.

My mathmatics tells me that we won't reach that at anywhere near the levels I would anticipate this freedom would bring.

And even if the charge to trade was, say, $5 per trade, that would generate sufficient funds that we would never reach that point.

If the costs were low when less than 1% of TSP participants were actively trading, what happens when, say, 5%, 10% or 25% actively trade?

Let's say that 10% of the shareholders actively trade, four times per month.

That would be on the order of 290,000 people, trading four times per month, which would equal 1,160,000 trades taking place.

If there were a $5 charge per trade to do that, that would generate $5,800,000 in income for the TSP per month to execute those trades, or $69,600,000 per year.

Currently, the ENTIRE BUDGET for the administration of the TSP is less than $90 million. Adding in $69 million in income from $5 per trade fees would far exceed the costs involved in executing all those trades.

Currently, our TSP Board allows Barclays to engage in Secutrities lending. That should concern you more. Securities lending is lettling others borrow YOUR SHARES to short the market. According the current November issue of the Meeting Minutes, Securities trading brings in some $90 million in income to the TSP annually.

The Thrift Board's reaction to that figure:

Here is a quote from the meeting minutes of November, 2008:

"Mr. Fink then asked whether the $90 million generated from securities lending was significant.
Ms. Ray noted that it is a few basis points, and Mr. Petrick
commented that is it the size of the Agency's budget."

So, Tracey Ray thinks that $90 million is "a few basis points". And she is absolutely correct. It's a few basis points.

Overall, the TSP costs are less than 4 basis points per year.

We are beating the indexes by "several basis points" now, and then some.

So there is NO REASON to limit trades at this point.

There is NO REASON to limit trades, even if 10% of the people were doing it. We STILL would be able to beat the index performance, if past mathmatical history is any indication of future performance.

My 2 cents...

James48843

12-30-2008, 07:50 AM

What I meant by "institutional" trading activity was the management of the fund to mirror the index, in accordance with more regular trading activity balance the fund to match the index, while taking into account contributions and redemptions. The normal trading activity excluding active trading.

There is no "institutional activity" in this sense, with one small exception.

If a component of the index changes, then there is a mandatory change in allocation. Indexes don't change components very often. The S&P500 changed 23 companies between June 1 and October 20th this year, due to massive bankputcies (Lehman Brothers, Bear Stears, WAMU are just three of the 23 changed in the period of massive failures of large corporations. See http://seekingalpha.com/article/100912-nasdaq-comstock-added-to-key-s-p-indexes

In those kind of cases, when an index changes it's market basket, there is activity.

But short of that, "institutional activity", as you define it, doesn't exist.

And regular contributions currently far exceed redemptions, and most likely will for the foreseeable future.

There are more and more people being added to the rolls as contributors- far fewer are taking money out. Over the next decade, the number of redeemers will increase as baby boomers retire. However, the military number of contributors is expected to continue to grow significantly, and the number of new federal employees should remain pretty constant. Right now between 1.5 and 2 billion in new money is added each month as inflow.

The only growth area of "normal trading" recently, has been the introduction of the L funds, which rebalance every day. Tracy Ray claims that L fund rebalancing is miniscule. I believe it is a little more than that, but still it is not statistically signficant at this point.

Now, if 25% of the people held their money in L funds, then the volume could rise.

But even so, I don't think that amount of money moving daily is going to cause the funds to not be able to match the indexes they represent. Once again, Barclays has it down to a science at this point.

At what point is there too much play in the system where it produces negative consequences to the bulk of the TSP investors who are more long-term oriented (i.e., B&A's)?
If Barclays no longer can match the index, that is the point at which we need to take a look at it.

Maybe a $5 per month charge to all L fund holders, to cover the costs it takes for THEM to move their money on a daily basis. Remember, L funders have their money moved for them each and every trading day of the month. At what point do I, as a C fund holder, have a valid grievance against the L fund holders, that their moving of money on a daily basis adversely affects my returns? I will tell you that the costs are so small, that I am happy to allow them to utilize the L funds, as we STILL are able to meet and beat the index. Yet L funds DO take my money to administer for them.

Yet you don't hear the Thrift Board complaining about that.

No, costs are not excessive. Either for administering the L funds, NOR for allowing those who wish to actively manage their own funds. Returns in TSP continue to beat the indexes. If it ever is significantly less than that, THEN is the point at which to look at costs saving measures, or trading fees.

Until then, forget it. Costs are too small to worry.

XL-entLady

12-30-2008, 08:07 AM

James, my sincere and most humble thanks for stating the case for active trading so eloquently.

As I’ve said before, I am a FERS disability retiree. I have to make my TSP account last for decades. I cannot work another job to make my funds stretch. I cannot leave my account in “buy and hold” mode and take a chance that it will make enough money to cover my withdrawals.

By using my IFTs carefully in 2008 I was able to cover most of my monthly payments to myself while avoiding any losses to my account. If I had been able to actively trade my account I would have been able to add to my account substantially. I know that for a fact because I kept track of the trades I would have made if I had been able.

OBGibby, the facts James has presented on this thread are simple, accurate and irrefutable. I just pray that someday the TSP board will pay attention to them. My financial survival depends on it. If you are a federal worker, someday yours might too.

Lady

CountryBoy

12-30-2008, 08:12 AM

OBGibby, the facts James has presented on this thread are simple, accurate and irrefutable. I just pray that someday the TSP board will pay attention to them. My financial survival depends on it. If you are a federal worker, someday yours might too.

Lady

I agree with Lady James, very well said, and it's funny Lady that you mentioned "If you are a federal worker", because my read is that he isn't a fed.

CB

OBGibby

12-30-2008, 09:38 AM

Gumby

12-30-2008, 10:00 AM

James -

Excellent argument on all accounts. My hat is off to you. I especially enjoyed the civil discourse of this thread (and most threads on this Message Board), even when we disagree.

But, alas, I am a stubborn fool at times (or as my spouse would say - most of the time!), and I am not yet convinced that your argument is what's best for the TSP. I understand many of the points you and others have expressed, but some finer points still remain murky to me. It is certainly a persuasive argument, but I still harbor my doubts.

Thank you for taking the time to answer my questions. I certainly benefited from it and I suspect a great many other people have too.

Gibby,

Is the reason you disagree with James is that FRTIB is your employer?
My recommendation for the new year for you is to immediately buy into C, S, and I funds and hold all funds and report back next December 30.
Thanks in advance for saving with FRTIB and keeping transaction cost to a minimum.:nuts:

XL-entLady

12-30-2008, 10:09 AM

.... alas, I am a stubborn fool at times (or as my spouse would say - most of the time!), and I am not yet convinced that your argument is what's best for the TSP. I understand many of the points you and others have expressed, but some finer points still remain murky to me. It is certainly a persuasive argument, but I still harbor my doubts.

OBGibby, do you have a cogent counter-argument as to why we should not be able to purchase additional IFTs, charging our individual accounts an amount that would cover any real or imagined additional cost for that IFT?

Lady

James48843

12-30-2008, 10:48 AM

James -

Excellent argument on all accounts... and I am not yet convinced that your argument is what's best for the TSP. I understand many of the points you and others have expressed, but some finer points still remain murky to me. It is certainly a persuasive argument, but I still harbor my doubts.

Still harbor doubts?

Ahhhh,,, you... and Thomas. :D

(sigh).

Well, you are here now, in TSPTALK land. This is the place where people ask questions, and learn.

That is about all we can do. Education is key. Learn as much as you can. Find out who is dealing facts, and who is dealing fluff. Then decide in your own mind.

A long, long time ago, I was taught- "Question everything".

Because when you look behind the curtain, you can find many more pieces of the puzzle. And when you assemble the puzzle, you find wisdom

That is much more interesting than if you simply sit on the log and let everyone feed you pablum.

Best of luck.

When you learn more, let us know.

sdouglas3

12-30-2008, 11:11 AM

Still harbor doubts?

Ahhhh,,, you... and Thomas. :D

(sigh).

Well, you are here now, in TSPTALK land. This is the place where people ask questions, and learn.

That is about all we can do. Education is key. Learn as much as you can. Find out who is dealing facts, and who is dealing fluff. Then decide in your own mind.

A long, long time ago, I was taught- "Question everything".

Because when you look behind the curtain, you can find many more pieces of the puzzle. And when you assemble the puzzle, you find wisdom

That is much more interesting than if you simply sit on the log and let everyone feed you pablum.

Best of luck.

When you learn more, let us know.

James,

Maybe this person is new to investing or maybe is part of the TSP board and has nothing to do during the holidays. It’s amazing how mediocrity is more settling than being proactive. In anycase they will learn from this board.

Steve

FUTURESTRADER

12-30-2008, 12:12 PM

Still harbor doubts?

Ahhhh,,, you... and Thomas. :D

(sigh).

Well, you are here now, in TSPTALK land. This is the place where people ask questions, and learn.

That is about all we can do. Education is key. Learn as much as you can. Find out who is dealing facts, and who is dealing fluff. Then decide in your own mind.

A long, long time ago, I was taught- "Question everything".

Because when you look behind the curtain, you can find many more pieces of the puzzle. And when you assemble the puzzle, you find wisdom

That is much more interesting than if you simply sit on the log and let everyone feed you pablum.

Best of luck.

When you learn more, let us know.

Brilliant, James :) Thanks for all you've done and continuing to be our advocate.

dannyboy

12-30-2008, 01:54 PM

James -

The new system may have been designed to handled unlimited IFT's by everyone, but I don't think it was intended to. Sort of like the "worst case scenario" capability built into the system.

Greetings Gibby and welcome to the tsptalk circus. :p I'll be as open and honest as I can, and I'd have to tell you this site must have been inspired by GOD. I graduated in Computer Science and I work in the fiield and I have zero know-how on finances. All the insight that I receive here is incredible. :D I had a friend in high school everyone called Gibby. :suspicious:
Until reading this deep explanation by james48843 on his thoughts that he must have good connections with Wall Street and the companies involved. I've never paid a whole lot of attention to james48843, but I sure will from now on. I'm going to print out his threads and study this guy's knowledge and insight. I've been through this thread twice and I'm still unsure of everything. This guy should be elevated to "tsp guru" immediately. :cool:

OBGibby

12-30-2008, 02:01 PM

Lady -

Please see my earlier post in this thread where I stated I thought TSP participants should be able to have unlimited IFT's if the active trading participants paid for it.

To others concerned -

If you review my previous posts you'll find that I offered no disparaging comments relative to active trading, or its' proponents. In fact, I stated I appreciated the position/perspective of active traders. I have questioned the costs associated with active trading in the TSP and have attempted to examine the reasoning behind the decision restricting IFT's. Obviously, I've hit upon a raw nerve for many of you. Some of you have been gracious enough to indulge my curiosity and stoked my interest even more so on this matter, for which I am grateful. It's unfortunate some posts in this thread have a tinge of arrogance and offered no meaningful contribution to the discussion.

XL-entLady

12-30-2008, 02:09 PM

Lady -

Please see my earlier post in this thread where I stated I thought TSP participants should be able to have unlimited IFT's if the active trading participants paid for it.

From your mouth to God's ear.

Lady

tsptalk

12-30-2008, 02:12 PM

I've never paid a whole lot of attention to james48843, but I sure will from now on. I'm going to print out his threads and study this guy's knowledge and insight. I've been through this thread twice and I'm still unsure of everything. This guy should be elevated to "tsp guru" immediately. :cool:
James was the mastermind behind the website, tspshareholders.org. He got thousands of TSP participants to sign a petition against the proposed transfers limits. There's more to the story, and he could be at the "TSP Guru" level, but if I tell you any more, we may have to send some men in black to your house. :D

Frixxxx

12-30-2008, 02:45 PM

If you review my previous posts you'll find that I offered no disparaging comments relative to active trading, or its' proponents. In fact, I stated I appreciated the position/perspective of active traders. I have questioned the costs associated with active trading in the TSP and have attempted to examine the reasoning behind the decision restricting IFT's. Obviously, I've hit upon a raw nerve for many of you. Some of you have been gracious enough to indulge my curiosity and stoked my interest even more so on this matter, for which I am grateful. It's unfortunate some posts in this thread have a tinge of arrogance and offered no meaningful contribution to the discussion.
OB-

I think you are misunderstanding the issue here. Nobody sees you attacking the people here and I'm sure that no one is faulting you for your statements. I know that when I express my opinion on this site, I better have some serious facts to back me up. There are a few rants on this site I wish to take back.

That being said, James gave a lot of information that needs to be gleened and reviewed for novice to expert to understand here. I hope that with the information and links he has provided, that the alternate opinion have the same, or some, data to back up the claims or expectations.

Since you have joined the site some time after the announcements of IFT limits, you haven't seen all the research, request, rebuttals, and re-(insert fav). We debated the IFTs for months before it even occurred. We even asked for fees to be considered and it fell on deaf ears(FRTIB).

No one here has ever debated stronger than when they show up with the facts to represent their arguments. I personally spend most of my time trying to research most of the terms used on this site to even keep up with most of these guys/gals.

But something my Papa taught me early in life:
Arrogance is the thinking you can,
Confidence is KNOWING you can.

I really haven't seen the arrogance you reference but, if you have, I apologize for me and them.:D

CountryBoy

12-30-2008, 02:47 PM

To others concerned -

If you review my previous posts you'll find that I offered no disparaging comments relative to active trading, or its' proponents. In fact, I stated I appreciated the position/perspective of active traders. I have questioned the costs associated with active trading in the TSP and have attempted to examine the reasoning behind the decision restricting IFT's. Obviously, I've hit upon a raw nerve for many of you. Some of you have been gracious enough to indulge my curiosity and stoked my interest even more so on this matter, for which I am grateful. It's unfortunate some posts in this thread have a tinge of arrogance and offered no meaningful contribution to the discussion.

Uh -huh, that's good enough for me then, please forgive my curiosity. :rolleyes: And BTW it wasn't a tinge of arrogance, just an honest observation, so chill if your being truthful and yep you hit a sensitive subject, especially when it comes to someone preventing me from increasing my retirement funds, just so they could help their buds at barclays. ;)

Frixxxx explained the work we went thru much better than me, but he didn't need to apologize for me since arrogance wasn't meant, but then he is much more diplomatic than me. :) You just kinda stuck your stick in a hornets nest and got some of us stirred up that fought the battle with our so called TSP board, who is supposed to look after our best interests, plus we know they had folks monitoring the board during all of that period as some folks were quoted in response letters back from his majesty Long.

CB

DrFaustus

12-30-2008, 02:57 PM

I know things differ from agency to agency, but my former agency (I'm retired) never mentioned the TSP. If we saw a TSP email it was a very occasional piece of spam that got through the junk mail filter. When I first started trying to educate myself I wasn't sure where to even start. That's why I had (still have :rolleyes:) some black holes in my knowledge base, even though I have a business and accounting background. Most people in my former agency don't even think about their TSP accounts. Sad.

Lady

This goes back to what I was saying when the FRTIB started all of this business of limiting IFTs. The reason that the TSP is such a low cost vehicle is because the vast majority of its members are content to let their money ride in the G fund. The fact that one tenth of one percent of its members were causing costs to rise by actively managing their accounts proves that the FRTIBs claim of the TSP being a low cost vehicle was a complete and total sham. It's high time they owned up to it.

Spaf

12-30-2008, 06:50 PM

Still harbor doubts?

............Well, you are here now, in TSPTALK land. This is the place where people ask questions, and learn.

That is about all we can do. Education is key. Learn as much as you can. Find out who is dealing facts, and who is dealing fluff. Then decide in your own mind..........................

Thanks James!

Glad you were able to answer the questions about Interfund Transfer costs. Maybe folks will be better informed. This is now a good thread to answer that question.

Thanks again! Spaf...........:)

OBGibby

12-31-2008, 01:38 AM

OB-

I think you are misunderstanding the issue here. Nobody sees you attacking the people here and I'm sure that no one is faulting you for your statements. I know that when I express my opinion on this site, I better have some serious facts to back me up. There are a few rants on this site I wish to take back.

That being said, James gave a lot of information that needs to be gleened and reviewed for novice to expert to understand here. I hope that with the information and links he has provided, that the alternate opinion have the same, or some, data to back up the claims or expectations.

Since you have joined the site some time after the announcements of IFT limits, you haven't seen all the research, request, rebuttals, and re-(insert fav). We debated the IFTs for months before it even occurred. We even asked for fees to be considered and it fell on deaf ears(FRTIB).

No one here has ever debated stronger than when they show up with the facts to represent their arguments. I personally spend most of my time trying to research most of the terms used on this site to even keep up with most of these guys/gals.

But something my Papa taught me early in life:
Arrogance is the thinking you can,
Confidence is KNOWING you can.

I really haven't seen the arrogance you reference but, if you have, I apologize for me and them.:D

Frixxxx,

Please refer to Post #30 in this thread where I prefaced my inquiry into the issue of transactional costs associated with active trading through IFT’s with an assumption that the transactional costs were to the detriment of all TSP participants, and I asked that if my assumption was incorrect, to please advise. A review of my subsequent posts in this thread reveals I posted additional questions on the subject and James (and others) have done a wonderful job in explaining many intricate facets of the subject at hand.

As I stated earlier, proponents of unlimited IFT’s in the TSP have presented a very persuasive argument in their favor; however, I am not yet convinced. This is a statement of fact as it applies to me and implies nothing towards anyone else. It simply means that I am still in analysis mode and leaves open the possibility that my views will change. Nothing more, nothing less.

From your post you seem to imply that I should be prepared with “data” and “facts” to support whatever position I am debating. I did not engage in this particular discussion to debate with a confrontational argument – I asked questions. (My apologies in advance if I have misread the tone and intention of your post)

I accused no one of attacking me; rather, I observed that I had not been disrespectful of others during the discussion, in an effort to offer comparison to some of the other posts in this thread wherein it a) was questioned whether I was actually a federal employee; b) implied I was a tool for the TSP Board; c) recommended I engage in a B&H investment strategy; and, d) seemed to equate a B&H investment strategy as inferior to a proactive approach (with the implication being that active trading trumps B&H). Regarding my accusation that some posts were tinged with arrogance, from my perspective, the aforementioned posts (c) and (d) fit that category – we may disagree on many things, to include investment strategy. I’ve offered no criticism of active trading, yet some can’t seem to hide their disdain for any strategy other than active trading. As I’ve stated in earlier posts on this Message Board, for personal circumstances, B&H is the right strategy for me, for now, for my situation. But everyone has a different situation, so throwing around blanket statements implying a strategy unlike their own is inferior smacks of arrogance to me. Concerning posts that offered nothing significant to the discussion, posts (a) through (d) fit the bill in my mind.

As I mentioned in an earlier post, I suspect many people found the discussion regarding IFT’s in this thread beneficial. If may be worth consolidating that particular discussion and the analysis provided by James and others into one long post, clean it up to make it flow easily, and then apply that post as a “Sticky” somewhere on the Board.

James48843

12-31-2008, 09:43 AM

Gibby- Good morning-

Sorry if any of us sounded off after the debate. We did a lot of work back when this was being rammed down our throats, to try and enlighten the Thrift Board as to their mistake. They didn't listen, heck, I don't even know of any of the actual Thrift Board members ever saw our 4,000 signatures, and data package showing that what they were about to do was a mistake. I believe that Greg Long and Tracey Ray intercepted the data, refused to share it with the Board, because it didn't fit their preconceived notions. Now that we have a year's worth of real data, we hope we can find another way to get them to re-look what they did.

Anyway, no one here would (or should) tell you that one strategy or another strategy is the right one or the wrong one. If someone told you Buy and hold was bad, they shouldn't have. Buy and hold is ONE strategy. For those who wish to follow that, more power to them. Swing trading is another strategy, and for those who choose to do that, I say they are welcome to work on their own strategy. I've seen "LAst month, best month" work better than I thought it was going to. So I am intrigueed with that approach as well.

None of them are "right" or "wrong". It's all in the risk tolerance one has, and what one wishes to do with their own money.

People only get upset when someone changes the rules, and prevents them from exercising their own strategy, based on false assumptions. The false assumption I am talking about is that trading costs others money, or "too much money". It's simply not true.

You are welcome to post any question here, at any time. Educate yourself, and do what YOU are comfortable doing. That's all anyone can ask. You are entitled to be skeptical. We just know that when your skepticism ends, and you have real facts at your fingertips, then you'll be in our camp, not theirs.

Welcome to TSPTALK. A world of learning, one person at a time.

It would be rather hard to blend, merge,and edit all the posts in this thread. Believe it or not, this thread has been replicated about four or five times over the last year- and already exists in several of the forums here.

I hope you spend some time digging around the threads of all the forums. You'll find great debates, good information, and will learn a great deal.

Welcome aboard.

Frixxxx

12-31-2008, 02:04 PM

Frixxxx,

Please refer to Post #30 in this thread
I read the whole post!

Regarding my accusation that some posts were tinged with arrogance, from my perspective, the aforementioned posts (c) and (d) fit that category – we may disagree on many things, to include investment strategy. I’ve offered no criticism of active trading, yet some can’t seem to hide their disdain for any strategy other than active trading. As I’ve stated in earlier posts on this Message Board, for personal circumstances, B&H is the right strategy for me, for now, for my situation. But everyone has a different situation, so throwing around blanket statements implying a strategy unlike their own is inferior smacks of arrogance to me. Concerning posts that offered nothing significant to the discussion, posts (a) through (d) fit the bill in my mind.

I stopped trading in July, the limits made it impossible for me to try and "guess" the market.

But everyone has a different situation, so throwing around blanket statements implying a strategy unlike their own is inferior smacks of arrogance to me. Concerning posts that offered nothing significant to the discussion, posts (a) through (d) fit the bill in my mind.

Like I said in my post, I really haven't seen the arrogance just their strategies. Strategies differ and they always will. Don't get me wrong, your questions were good, I just think that when you call out arrogance by a few "tongue in cheek" remarks you may have gotten the wrong idea. Everyone I have dealt with here has been more than fair in treating me as a respected member. Judging from your comments and questions so far, you WILL be a respected member.

I also said that I apologize for myself and others, and believe me my new friend - I MEANT IT! Happy New Year!:D

F4mandolin

01-06-2009, 03:23 PM

Just made the effort to look all the way through this thread. I am one of those people who are 50-50 on what has been said through this thread. I had the chance to move to either TSP or stay with CSRS way back in the late 80's....all I got from the "officials" that represented the FERS program was how much better it would be. It was repeated over and over that it was the smart way to go. I wish I could prove that now....young and foolish at the time I didn't realize that if the govt said it was the best thing for me.....it was the best thing for them. Water under the bridge, can't change it. Am I still maxing out my TSP...yep. Max plus the over 50 catch-up. Is it the best possible financial thing to do? Not sure....I have read comments about how it is my responsibility to take action.....and how it is the govt's job to make more effort to get us clued in. I can say I do not know one person who is under FERS that I work with (I am a school teacher....short attention spans at the best of times) that really know how the program works. I am hoping to retire on VERA (if they offer it) in the next couple of years at 53-54. Not because I have saved a ton of money....but because I live cheap. I had to make the effort to learn what VERA was....I still am informing people that I work with on what TSP is and what VERA is etc etc...and quite simply, I don't know what I am talking about.....I just know more than they do. There are no easy answers to these TSP questions...I wish I had maxed out my TSP when I started......I just put in the matching. Better than nothing, but I have less than those that were putting in more. I need to get out of teaching because I don't see any real changes taking place that will help...I just don't think they are pushing for what students really need. Scores on tests are the number one concern.....knowing anything about financial problems isn't tested.....so they better learn it somewhere. Oh well....back to the mandolin.......yeah, like I am going to make a living doing that, but I do enjoy it......

tsptalk

01-06-2009, 03:29 PM

Welcome F4mandolin! Nice first post. I remember those days, FERS or CSRS? Hell if I knew. I was 20 at the time. I made the wrong choice also.

Gumby

01-06-2009, 03:44 PM

young and foolish at the time I didn't realize that if the govt said it was the best thing for me.....it was the best thing for them. ......

I remember standing in line waiting to get into the retirement system meeting our agency was having in 1986. I was talking to my clerk that had ~30 years of service in.....and asked her if she was changing from CSRS to FERS. She said "If is so good for me....why are they pushing it".
Needless to say, I stayed CSRS, but always remember her words of wisdom.
The presenters at the meeting did make it sound like the FERS matching was the way to go. Not many people in my agency switched to FERS.

FUTURESTRADER

01-06-2009, 04:04 PM

I remember standing in line waiting to get into the retirement system meeting our agency was having in 1986. I was talking to my clerk that had ~30 years of service in.....and asked her if she was changing from CSRS to FERS. She said "If is so good for me....why are they pushing it".
Needless to say, I stayed CSRS, but always remember her words of wisdom.
The presenters at the meeting did make it sound like the FERS matching was the way to go. Not many people in my agency switched to FERS.

Too brilliant, sad but true.

FUTURESTRADER

01-06-2009, 04:08 PM

XL-entLady

01-06-2009, 04:33 PM

Welcome F4mandolin! Nice first post. I remember those days, FERS or CSRS? Hell if I knew. I was 20 at the time. I made the wrong choice also.

Ditto, tho I'm not ready to concede the choice just yet. But the effort required to educate ourselves is justified and should be much more supported by the government as a large part of each individual's job duties.
Yes, nice first post!

And, Futurestrader, I bolded part of your response because it couldn't be more important!

When I joined the service I was FERS by 6 days and my HR person tried everything she could think of short of falsifying documents to switch me to Offset so I could choose CSRS, but it couldn't happen. She then explained to me that I'd better stay as informed as I could about the new system (FERS). I took her advice and tried to learn, but worked in remote areas and before the advent of the internet there wasn't any information out there.

In our agency were we told about compounding? Or bonds vs. equities? Heck no! (I have to say 'heck' because I live in Utah! :laugh:) We weren't even told to ensure we got our matching contributions! I paid attention and I've retired in better shape than many of my co-workers are going to. And the internet has gifted us with sites like this MB for information. (Thanks again, Tom!) But when I get on my soapbox about TSP to my friends who are former co-workers, they still tell me, "It's a good thing you tell us this stuff because we don't get it from the brass!"

Bummer. Sad. Criminal.

Lady

pogo

01-06-2009, 04:36 PM

i agree FUTURESTRADER,if it was not for FERS i would of not got in the market (educate myself) i would of been like some of the CSRS people and just take my monthly check from the post office. I see what some of the carriers get for 30-35yrs and i shake my head in disbelief. I"m glad that i am in FERS.

Thunderhorse

01-06-2009, 04:46 PM

Welcome F4mandolin! Nice first post. I remember those days, FERS or CSRS? Hell if I knew. I was 20 at the time. I made the wrong choice also.

Yes, I remember those days. I didn't have a choice as I was a "recent hire" at the time. I do remember the hand wringing and lively discussions among co-workers who did have to decide which road to take.

HedgeHog

01-10-2009, 02:41 AM

I have been in the TSP 19 years and have taken the maximum advantage of saviing over the years. I do believe there is a destructive mentality by the plans managers that the plan should be a buy and hold savings plan or get in the "G" fund. People who have followed that mentality were most likely financially harmed in the past year.
Having read through liturature the plan managers put out and their actions I think the whole group should be replaced. In spit of them I worked out a little over a 7% gain in 2008 with my 2 IFTs a month. It would have been a lot more without that restriction. HedgeHog.

roskopfm

01-10-2009, 07:48 PM

Its not buy and hold, you can move twice a month. Fidelity and Pruduntial dont let you even change more than once a quarter. I think the restrictions are fair.

Show-me

01-11-2009, 08:43 AM

Buy and hold is just that and with two trades a month you can not even do a good DCA into a fund. I use to break my account up into 20% increments and do a classic DCA into a bottom I can not do that now and that kills if you are not exactly right and that is impossible to do constantly. With DCAing it is much, much better.

Just because Fidelity and Prudential do it should not be a reason we do it that way and if I don't like Fidelity or Prudential's policy I can shop around and transfer my money out of their accounts.

Point is times are changing and even the media dogs will tell you this is NOT a buy and hold environment and will not be for a very long time. If you want to make money you need to be nimble and have options. We are in the age of electronic trading with instant information on the web. Full access to market news, earnings, economic data, trading desks, limit orders, stops, calls, puts, ETF's, inverse ETF's, leveraged ETF's, etc. We need to be on the cutting edge or get left behind by the market leaders. It is that simple, market leader take advantage of new products and trading vehicles. My belief is the day of the buy and holder will fall to the wayside as the baby boomer's die off and a new generation steps up.

We had that with the unlimited IFT and now we don't have it when we need it the most and we are not saving any money with the restrictions like Tracy Ray said we would. Their timing was awful on this and the majority of participants are inactive or not proactive in managing their account or keeping up with market fundamentals or trends.