.... And it wouldn't make much sense to pay a 1% fee if all you're looking to make is 3.8%.
The main problem/issue with option #1 is the fee. A 1% fee is high especially compared to what they are going to do with your money which is basically park it somewhere (some type of index). In my opinion it's best to leave it in TSP because I can almost guarantee you that you will not find a financial institution that will beat the fees/expenses of TSP.
I'm going to compare the last 14 years of the L-Income fund to Ric Edelman's 1% fee.
EXAMPLE: Say you had a starting balance of $500,000 in the L-Income. After 14 years you would have paid $8,679 in fees. If your money would have been with Ric Edelman you would have paid $87,529 in total fees. This is a big difference.
What most of us fail to realize is this fee (1%) is a percentage of your account value annually. One percent of $500,000 is $5,000 for the first year.
In this example I used an average return of 3.84% because that is the average of the L-Income fund since inception. The average annual fee for the L-Income fund is 0.093%. The first year fee for the L-Income fund would have been $465.
.... And it wouldn't make much sense to pay a 1% fee if all you're looking to make is 3.8%.
Tom
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I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.
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