TSP: When More Is Not Necessarily Better

Friday - 9/16/2011, 2:01am EDT

Do federal-military investors want, need and deserve more options and more fund choices within their Thrift Savings Plan?

Yesterday's column included an extended letter from a TSP investor who wants more than the existing C,S,I,F,G and the L funds. He said many friends and coworkers feel the same way and they are angry and frustrated that the government doesn't give them more fund options. Maybe, but they didn't check in yesterday.

Instead we were swamped with emails from investors who are very happy with their choices and the low-fees charged by the TSP.

For example:

  • "My wife has a 401K being handled by a big name brokerage firm. My money is mostly in a L fund with some in the I and S. I have done way better. Private investment funds do not have the clients' interest in mind and it is not their 'RAISON D'ETRE.' They exist to get people to invest in funds that they operate and get paid handsomely to manage.

    "If you ever read columns by folks like Jane Bryant Quinn, they advise to forget timing the market. They say have a steady investment in a broad-based fund such as a S&P 500 fund. The TSP offers the most cost-efficient way of following sound advice. In short, "If it ain't broke, don't fix it." Larry at SSA

  • "In response to RCP who doesn't like the way the TSP is operating:

    "What's the problem? You are not being forced to participate in the TSP. Don't put your money into the TSP! Put your money into an IRA instead, with whomever or whichever institution you like the best. Then you will be in Complete Control!" H.E.

  • "I'm entirely with Chuck (comments) today on keeping TSP costs low, that is one of the biggest keys to accumulating and compounding money. How many well known financial planners have you interviewed that are extremely envious of the plan exactly as it is? There is a lot more to finances than "trusting" all your investment money to a manager, you need to put some effort in it yourself. TSP is a great vehicle to help us with retirement, please don't mess with it. " Dave @IRS

  • "I have to respond to V/R, RCP's comments about opening up TSP to private firms and options. I think most Feds would agree that what we want is a safe, low cost place to invest our money and are not looking for some pie-in-the-sky, get-rich-quick scheme. I personally like the options we have. It makes things simple to manage and allocate and easy to understand. Too many options just confuses it too much. The only way this works as well as it does is that it is the way it is. Too many options, with Open seasons and no controls on cost, is not a good thing. In this case a monoploy, as V/R, RCP called it, is a good thing.

    "And if V/R, RCP thinks that "A PROFESSIONAL MONEY MANAGEMENT FIRM" really has his/her best interest at heart, think again. They are in it to "MAKE MONEY FOR THEMSELVES", not for you.

    "Another quote from V/R, RCP states "Rather than 185 millionaires over a 25yr period out of 4M participants, Fidelity, Vanguard, etc. would result in many, many more Feds have the kind of nest egg at retirement that would substantially soften the blow and make any reductions in the pension and entitlements easier to absorb -- IF WE WERE ALLOWED TO PUT OUR MONEY WITH A PROFESSIONAL MONEY MANAGEMENT FIRM THAT HAD OUR FINANCIAL WELL-BEING AND OUR FINANCIAL GOALS AS THEIR RAISON D' TERE" I would bet that many more people would have absolutely NO MONEY left in there accounts now if this were to come true than made more money, considering the Market Downturn that have occurred over the past 25 yrs? Todd Smith Gaithersburg, MD

  • " The comments from V/R, RCP were interesting. That being said, wasn't it the "MONEY MANAGEMENT PROS" who crashed the economy in the first place? Still Under the Bus (because of the "money management pros").

  • "RE the guy who wants more investment options. Try this: Invest in an IRA outside of the TSP. Then he can pay higher fees for a an 'actively' managed fund. Much easier to go broke that way. I'll bet this person spends most of his work-day on the computer checking the market. R. Campbell


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