Return to Article: Critics call TSP mutual fund option risky
-
92065
I agree completely with Joe Fed.
Anyone who wishes to can participate in any "mutual fund", or other investment they see fit. It's their money, their funeral.
However, the TSP is, at bottom, an extremely well run operation. It affords reasonable diversity and prudent options. Those options don't remove all risk, but they're well described and abundantly obvious.
In my view, it should be left alone -- it's worked extremely well and likely will continue to do so.
-
91377
Since the money in the Thrift Savings Plan is going to be ours anyway, I think that it would be easier and less costly to just let us transfer the current balance to an IRA with the broker of our choice. We can then trade it the way we want and even convert to ROTH. Unfortunately those who call it risky are not traders. I think its risky if you can't take control of your future.
-
91373
The expansion of the TSP to offer the S and I funds were great moves, and those invested in them like myself have benefited greatly - despite some short term set backs.
Surely we have not reached the edge of the investment world with those additions. Yes there is a wide investment world out there, and while most federal employees won't ever bother to venture there, many alternative investment choices await. Unless one claims to know with certainty exactly how the future will unfold, who is to say exactly what is best investment within your TSP in the long run.
When offering the mutual fund option, the TSP could even present some restrictions to reduce risks. For example, it may limit total outside mutual funds to, for example, 40% of all TSP assets, not allow investment in mutual funds with total fees higher than 2%, and enforce the same trading restrictions as with TSP funds.
-
91368
The TSP administration expense is indeed low. However, there isn't much diversification possible. You have a choice between government equities, which makes less than I could get at a bank, the Fixed securities index which for some yet unexplainable reason can actually lose money, and three stock funds. Of course, all the stock funds go down generally as the DOW does, so you're really not diversified. There are much better bond funds available from Vanguard, Fidelity, etc. that would outperform the G and F funds.
AS for comments about IRAs...there are income limitations. Some of us exceed those limitations. Sure, we can invest in mutual funds on the side, but the bulk of our money...what 15K per person plus employer matching goes to the TSP. For married couples, that's a ton of money. Is it unreasonable to request more diversity (and I mean diversity of actual investment types not the number of funds)?
-
91345
I used the once in a lifetime "in service withdrawl" feature to roll over half of my TSP balance to a mutual fund IRA and will roll over the other half at retirement. Why? So balance my risk. TSP is a risk, not a guarantee, so, I took the only option available to spread the risk. Yes, there's a fee for mutual funds, but you get what you pay for, and they pay dividends and capital gains. The TSP funds are index funds, not managed. Another time tested addage (ask Enron stock holders): "Don't put all your eggs in one basket."
-
91342
Okay, "Nanny, granny, Smanny". I STILL want to be asked. When is the TSP board going to quit taking the word of the unions in place of ours? I can't wait until they redesign that web site with a comment/feedback option. Wouldn't y'all just love to be asked what you want done with YOUR retirement fund?
-
91333
Don't only add that option - add many more as we should be in control of our own financial fate. If you are concerned about the rest of the high over the cuff uninformed risk takers, a saying my father said comes to mind - "you can't fix stupid!" So....quit trying....
-
91327
I agree with 'j' -- slstom, stop being such a jerk and stick to the point.
-
91278
all investments experience some kind of risks, even treasury bill. because it's risky, that's why it's option.
-
91267
Just what we need, another tree hugging, anti-war, rhetoric spouting jerk mixing his/her politics into a financial conversation.
-
91251
OverPaid Peon, you were the only one to mention Obama in the previous comments. A nanny state was mentioned. Funny how you equate that with Obama. Your slip is showing honey.
What is interesting is that these options available to us in TSP were howled at when it came time to discuss doing the same with your own contribution that goes into Social Security.
The whole thing is just hypocritical.
-
91246
Your local broker is itching to get his(her) paws on that pile of TSP money. They know the ca not beat the low rates. They will promise the moon to get you to switch into their funds.
-
91231
People like Micheal who want unlimited choices think they are so much smarter than the rest of us and will become rich if only allowed to make any investment they think best. But the truth is that kind of greed almost always backfires. Just like with the Madoff so called "victims". I remember in the 90s watching a little old lady on the news standing outside a 5 star hotel in West Palm Beach in a fur coat worth thousands weeping about losing her life savings when "junk bonds" she purchased went south. She did not come to the rest of us to share her miraculously higher than normal rate of return when those investments were paying off but when she lost some money (and I didn't beleieve it was her life's savings judging by the clothes she was wearing, more likely just some of the money she got in an inheritance or by divorcing a rich husband)she wanted the Government (us, the taxpayers) to make up her losses. Yes all investments contain some risk, but the TSP manages that risk by the choices they provide and also keeps the costs very low which allows a greater rate of return for those of us who just want to have a decent standard of living in retirment and are not looking to strike it rich. If that is your goal you should invest whatever funds you have left over after contributing in the TSP into high growth funds outside the TSP. Have we not learned the consequences of letting GREED dictate our decisions over the past couple of years???
-
91219
I love all the whiny people complaining because they think the government is telling people what's best for them. Where were you whiners when the government was saying that we should go headlong into an illegal war with no exit strategy?
If you don't like it, don't invest in it. But for God's sake, take your whiny anti-Obama hate-speech somewhere else. Your whining is insulting to those of us who think for ourselves.
-
91218
I love all the whiny people complaining because they think the government is telling people what's best for them. Where were you whiners when the government was saying that we should go headlong into an illegal war with no exit strategy?
If you don't like it, don't invest in it. But for God's sake, take your whiny anti-Obama hate-speech somewhere else. Your whining is insulting to those of us who think for ourselves.
-
91212
As a newcomer to the investing world I have found that my local library has a wealth of information on how to "wisely invest". Also take a look a trade publications for the free information they provide, like the Wall Steet Journal. It not hard to learn what is a wise investment and what isn't. The information is out there. It just means you will get to spend fewer hours in front of the idiot box or at the local watering hole wasting the precious time away. One quick hint for those out there that are new to the investment world. The Wall Street Journal provides an immense amount of information when you get it electronically over the internet. And you can access it 24/7/52. Try it you will like it. And, it doesn't hurt one bit.
-
91210
No one is stopping any Fed from investing in mutual funds. Why don't those who support this invest in mutual funds outside the TSP where no one can restrict your options? I max out my TSP each year and use a brokerage for my mutual funds. If I can manage my investments, I can handle balancing two accounts to ensure that I have an appropriate portfolio. In this instance, the private sector offers it so go ahead and take them up on! Those folks complaining about big government and the nanny state are the same ones who feel that it's the government's job to provide them a full array of investment opportunities. Ridiculous!
-
91206
Federal employees can currently invest in all the mutual funds they want. They just do it on their own time with their own dime. The push to have mutual funds included in TSP seems to be driven by a desire from the mutual fund industry to get at the government's matching funds.
-
91204
I've had an IRA since the 1980s in addition to a TSP account. The IRA fees are high and eat into the returns much more than the TSP fees. I have no problem with allowing those who want to invest in the general mutual fund market to do so, but they should pay any extra cost above the current very low TSP fees. I'll take "nanny state" and low fees any day over the more typical stock broker fees than mainly serve to enrich the broker.
-
91199
The critics jest? Right? What do you call Social Security? It's a lame ponzi scheme that is not going to be around when most of us retire.
-
91194
Re "the large fees and load charges that mutual funds impose on investors," it depends on the fund. It's easy to find no-load, no-12b-1 fees with low management costs, e.g., many of Vanguard's index funds.
-
91192
Gee, we should be so fortunate to have Rep. Connelly and J. David Fox/ AFGE speak up for us "ignorant Federal Employees." Wouldn't want to give us idiots a choice would we?? Well, as someone who does invest in several different mutual fund companies in addition to & outside of the seemingly "great" TSP- there are many mutual fund companies that have just as low, if not lower fees and are no-load funds (for J. David Fox- in case you were not aware of this). Anyone who knows how to read- can learn how to wisely invest their money via magazines such as Kiplingers, Money, or Smart Money or by using a good discount brokerage.
As someone who does invest in outside companies like Janus and Vanguard, I would also like to point out that while my TSP has consistently performed BADLY and has been in the negative from the get-go, my other NO-LOAD funds that I DIRECTLY invested in, have outperformed the TSP by a long shot, even in the current economic downturn.
Given the choice of investing in the TSP or a mutual fund of my choosing, I can personally say that I would pull every nickel out of the TSP and put it where I know my money is generating a return for my future retirement; not consistently losing money thanks to those like Rep. Connelly and Mr. David Fox who seem to think that they know better than I do how to invest my hard earned paycheck. Of course, I would also venture to guess this is the very reason that folks like them are trying so hard to keep their foot on our collective necks with the TSP. Because if people had a better choice of investments, they would figure out that the TSP is just another failed gov't program.
-
91191
Joe Fed got it right in his comment at six minutes after midnight. The TSP is a benefit designed to serve the financial needs of the largest number of feds. Yes, there are always the vocal minority of folks who want the TSP to do bizarre things and open "new" opportunities. Trouble is, the rest of us pay for upkeep and administration associated with such ventures. Leave TSP alone. We have enough choices. The administrative costs are low. If you're so worried about the "nanny state," just take your money out of TSP and go invest it wherever you'd like. But the rest of us like the TSP to remain just like it is today. Oh, one more thing. To hang any discussion of "change" on the Democrats, or the Republicans for that matter, is childish. Grow up!
-
91189
"the proposed mutual fund window for the Thrift Savings Plan, [...] could subject participants to unnecessary risk." I must agree. With such a large percentile of the target population relatively uneducated on stocks, many may choose the stock de jure. Index funds have proven their worth in exceeding average stock returns without as large a precipitous risk.
Even though I like options, I must wait for more details before giving this option "a thumbs up" as to its benefit to the TSP participants as a whole. Still, individually, this could be a "God Send" or a disaster in the making.
That leaves only cost as a consideration. Once more, only time and details will tell.
"Congress allowed, but did not mandate, that the TSP board create such an option; TSP administrators have said they haven't decided yet whether to implement it, and likely will wait until other upgrades are completed." Despite past initiatives with minimal input from us, this seems a wise path.
I must agree with Dave's "nanny" comment. Yes, most of these pronouncements sound paternalistic. Still can't wait for the participants' comment input option through the web portal.
-
91186
I remember the "salad days" of TSP back in 06 and 07 when we were all making a killing in the TSP. Up, up and up with no end in sight. I was utilizing the previous TSP system to trade on a semi-day-trade basis. By keeping a close eye on the market and performing some due dilligence of my own, I was able to post a greater return on my TSP account than my co-workers who never moved their money and the fund managers of the accounts. And what happened? The TSP Board decided to limit trades to 2 per month. So much for faith in the employee. So many times, proponents of bills which put responsibility on the citizen, fear the slippery slope. Put some actual, objective, numbers on the table and then discuss the pros and cons. Until then, I see no reason to shut down this proposed option.
-
91183
If allowing investment in mutual funds increases the cost of the TSP for other in any way, it should be opposed. And this isn't a "government" issue. Employers typically select the type of 401K programs that their employees participate in at work. Nice try, "patriots"!
-
91182
There is no one stop shop for all your financial retirement needs. I recognized this decades ago and opened a brokerage account when the TSP fell short. When I changed employers, a 401K was added. When those are built up and it's time to withdraw, consolidation or new accounts may be in the picture. Bottom line - don't wait for the TSP, chose your own avenue at your own timing.
-
91176
The ever present nanny state knowing what's best for me !!
-
91175
I am tired of these so called Federal Government Employees and Congressional representatives who do not represent me, speaking out on what is best for me.
If I want to invest in mutual fund of my choice, I should be allowed too. If I want to be safe and invest in the fixed securities fund or the government T-Bill/Bond fund I should be allowed to.
Why do these people constantly want to reduce my options because they think they know better than me.
-
91171
Will it affect the overall cost of the program to those that do not choose to participate in the Mutual funds part of the program which will cost more to administer. To the best of my knowledge the TSP program is cost effective when it comes to fees etc.. Lets look at it from what is best for all concerned.
-
91168
I feel so fortunate to have all these "experts" taking care of me since I am obviously to ignorant to make my own decisions when it comes to my retirement and how I manage it. Question: Why is it only democrats and union officials that are concerned and want to guide me? Seems to be a trend. First NSPS now retirement. Maybe if my social security was not going to provide social programs for illegal aliens, I would not have to consider "risky" mutual funds.
-
91164
Mutual funds risky? Can they be any more risky than equities when a bubble pops? Or for that matter, government bonds in an inflationary depression environment? All investing is gambling. Life's a risk and so is any form of gambling, including investing.
-
91162
Depends on your agency. USGS employees already have a considerable list of mutual funds and stocks that are not allowed regardless of whether you are in the minerals service, water resources or biological resources. How would the TSP handle that? As to employees, a majority that I financially review and advise have mutual funds with fees and expenses that are 5 times greater than the TSP index funds and the general public has the same problem of purchasing funds with high fees. I can't see where any good would come of allowing investment in mutual funds considering the financial illiteracy of investors. For the supporters, just ask your fellow employees about 12b-1 fees and see how many blank looks you receive. If more than half of your colleagues can answer that question, I would reconsider. What would be the load and commissions on such purposes? If the employee bears the entire cost of commission, front loads, back loads, Class B purchases, 12b-1 fees, et. al. then I say let them throw their money away but not a single penny should be borne by TSP participants.
-
91161
Depends on your agency. USGS employees already have a considerable list of mutual funds and stocks that are not allowed regardless of whether you are in the minerals service, water resources or biological resources. How would the TSP handle that? As to employees, a majority that I financially review and advise have mutual funds with fees and expenses that are 5 times greater than the TSP index funds and the general public has the same problem of purchasing funds with high fees. I can't see where any good would come of allowing investment in mutual funds considering the financial illiteracy of investors. For the supporters, just ask your fellow employees about 12b-1 fees and see how many blank looks you receive. If more than half of your colleagues can answer that question, I would reconsider. Waht would be the load and commissions on such purposes? If the employee bears the entire cost of commission, front loads, back loads, Class B purchases, 12b-1 fees, et. al. then I say let them throw their money away but not a single penny should be borne by TSP participants.
-
91158
Mutual funds are a long term investment (five years or more) and mutual funds have been very profitable over time through the years. Certainly there is some risk but less risk than investing in single stocks.
-
91152
People can invest in whatever they want outside of the TSP, but I think the TSP should stay what it is, a modest collection of low expense investment options. Adding all these various options will just drive up the expenses, and expenses are one of the biggest factors in investment performance over the long run. There is a TON of flexibility in the current TSP - use it or start your own IRA, but let's not mess with one of the best parts of federal compensation.
PROMO RIGHT: EVENTS
UPCOMING WEBINARS
NOVEMBER 18
Speed bumps for Teleworking: What are they and how to avoid them?
DECEMBER 3
Achieve Program Success: Unlock the Management Information in Your Data
DECEMBER 10
Practical Transparency: Applying Exchange Networks for Mission Results
PROMO RIGHT: DIRECTORIES
Post a Comment
To post a comment, you must provide a name and a valid e-mail address. Messages must be limited to 400 words. By using this Service you agree not to post material that is obscene, harassing, defamatory, or otherwise objectionable. Although Government Executive does not monitor comments posted to this site (and has no obligation to), it reserves the right to delete, edit, or move any material that it deems to be in violation of this rule.