I know not of what Boghie speaks of, according to the booklet, if you take a loan from TSP:
When you borrow from your TSP account, your account balance is decreased by the amount of your loan. If your loan account is invested in more than one fund, your loan is deducted on a proportional basis from the employee contributions (and earnings on those contributions) that you have in each fund.
When you pay back your loan:
When you repay your loan, your payments are invested in your TSP account according to your most recent contribution allocation.
Page 6 of the booklet.
The reason I post the interest rate is to show people thinking about a loan what the interest rate will be if they locked in at that time.
Hopefully this helps!
THIS IS WHERE I WOULD PUT SOMETHING TO REPRESENT MY THINKING, BUT THEN THEY SHOW UP!
Tracker = Check my position
THIS IS WHERE I WOULD PUT SOMETHING TO REPRESENT MY THINKING, BUT THEN THEY SHOW UP!
Tracker = Check my position
The bigger issue IMO is the difference between what you can loan money to yourself for and what the bank will loan it to you for.
If the TSP interest rate is 3.2 and the bank is 4.2 is it worth taking ?$ out of the investment stream vs. paying the bank the money. When bank interest rates are high it is a no brainer. A little more brain work when they are low or you are able to obtain a low rate.
In Dog Beers I've only had two.
THIS IS WHERE I WOULD PUT SOMETHING TO REPRESENT MY THINKING, BUT THEN THEY SHOW UP!
Tracker = Check my position
Interest Rate: The current interest rate for new loans is 3.375%, which is the current G Fund interest rate.
G Funders----REJOICE!!!!!!
THIS IS WHERE I WOULD PUT SOMETHING TO REPRESENT MY THINKING, BUT THEN THEY SHOW UP!
Tracker = Check my position
I took out the max loan for 5 years to pay off my Parent Plus loans for my kids college. While I would have made a 60% + gain if I had left the money in the S fund, I just considered it a portfolio diversifiacation ( aobut 25% in the equivelent to the G fund). I killed the 8.5% loans and am paying my TSP account back as 3.25%, so I figure that I enjoying a spread of about 12%. That's not a bad return anytime.
So, it just depends on what your circumstances are. I would be enjoying even a better situation if the market would just tank and my TSP account could lose 50% again. Then my decision to pull money out to pay loans would seem like sheer genius and I would have shielded that 50k from huge losses!
Official Retirement Date: 06-31-2014!
I reviewed a loan from a coworker and he was paying 600 a month to meet his minimum payment on a credit card.
We looked at the new bill and I showed him in 2 years at 6 month he could pay off his bill now.
He would have paid 600/month for 30 years if he paid the credit cards level.
He wins....saved him about 30K and he's debt free if he doesn't use the card for two years.....
Oh, and I had him up his tax-deferred contribution to the 5% to get the max matching.....he's taking home more this year.....
THIS IS WHERE I WOULD PUT SOMETHING TO REPRESENT MY THINKING, BUT THEN THEY SHOW UP!
Tracker = Check my position
A loan rate of 3.375% means a 'G Fund' return of 3.375%.
Whooopeeeeee...
But, that is very bad news for a government that borrowed $1.5 Trillion last year
Looks like the Bond Funds are pulling on the leash, eh...
Lookin' up at the 'G Fund'!!!
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