TSP vs IRA

[Kpop]

A lot of food for thought.

[Foghorn2]

I'm not averse to switching to Vanguard. I've been with Fidelity since 1986, but I'm willing to do what's best for my bottom line. Is there a particular mutual fund(s) at Vanguard that you recommend?

If I had to make any recommendations, it would be to avoid mutual funds all together. I have not looked personally into Vanguards products, but from what I understand of the company, they excel in passive index funds. This cuts out the large expenses of mutual funds and provides a much broader exposure to the market. I am reading a book written by Vanguards creator, "The Little Book of Common Sense Investing." Not very far in, but interesting so far.

[TSPBuilder]

I'm not averse to switching to Vanguard. I've been with Fidelity since 1986, but I'm willing to do what's best for my bottom line. Is there a particular mutual fund(s) at Vanguard that you recommend?

I have had great success with ProFunds. I transferred all but my annuity from Fidelity. I found them too rigid for my aggressive investment approach. ProFunds has waived their high fees every year for at least the past ten years. The only fee I pay is a yearly $15 fee for the IRA maintenance. They also have inverse funds if you want to make money in a down market. If you are risk tolerant enough they have leveraged funds for almost any sector.

Good Luck with your decision! Tim

[skiehawk11]

TSPBuilder,

We've discussed ProFunds before. Fees kill over the long term. Let's take an example:

ProFunds Nasdaq 100 fund's 10 year annualized return is 10.28%. It's also their best returning mutual fund over a 10 year period.

USAA's Nasdaq 100 fund's 10 year annualized return is 11.69%. The only difference? Fees. USAA has vastly lower fees.

I can find any ProFund asset class with lower fees and vastly outperform anything ProFunds has to offer. Fees kill. ProFunds offerings are horrible for long term investors.

[Midway]

TSPBuilder,
Did you have to ask Profunds to waive their fees or did they just waive them? Do you know if they do that for everyone or just a certain class of clients?

[TSPBuilder]

TSPBuilder,

We've discussed ProFunds before. Fees kill over the long term. Let's take an example:

ProFunds Nasdaq 100 fund's 10 year annualized return is 10.28%. It's also their best returning mutual fund over a 10 year period.

USAA's Nasdaq 100 fund's 10 year annualized return is 11.69%. The only difference? Fees. USAA has vastly lower fees.

I can find any ProFund asset class with lower fees and vastly outperform anything ProFunds has to offer. Fees kill. ProFunds offerings are horrible for long term investors.

Good Afternoon skiehawk11

Once again you are talking apples to oranges. I do not buy and hold as your example suggests is the only way to invest. I fail to see the logic that has me (or anyone else for that matter) riding a downtrend and losing money when I can switch to an inverse fund at no cost and continue to make money.

Please go to ProFunds (http://www.profunds.com/funds/#sort=Sho ... erformance) and check out the UltraNASDAQ-100 rate of return for 10 yrs. (17.08%) if you want to do comparisons. Same index just using a leveraged fund.

Please go to the prospectus (http://www.profunds.com/media/prospectu ... pectus.pdf) and on page 62 you will find the waiver of fees section that states: "Total Annual Fund Operating Expenses* 1.47% 2.47%
* ProFund Advisors LLC (“ProFund Advisors”) has contractually agreed
to waive Investment Advisory and Management Services Fees and to
reimburse Other Expenses to the extent Total Annual Fund Operating
Expenses, as a percentage of average daily net assets, exceed 1.95%
for Investor Class shares and 2.95% for Service Class shares through
November 30, 2017. After such date, the expense limitation may be
terminated or revised by ProFund Advisors. Amounts waived or
reimbursed in a particular contractual period may be recouped by
ProFund Advisors within three years of the end of that contractual
period to the extent that recoupment will not cause the Fund’s
expenses to exceed any expense limitation in place at that time."

Now, this all just confuses me to read so I just say to put $15,000 in their money market for a week then pull all but $1000 out to bypass the minimum required and do what I did and you will see over the course of a year there are no front loads, no maintenance fees (except the$15/yr IRA fee) and supposedly no rear load.

Don't trust me. Do your due diligence and please stop nay saying what you don't know about. Proof is in the pudding as us old folk say. Good Luck to all and please forgive my impatience on this issue.

T

[TSPBuilder]

TSPBuilder,
Did you have to ask Profunds to waive their fees or did they just waive them? Do you know if they do that for everyone or just a certain class of clients?

Hello Midway,

ProFunds does this for anyone that has the ability to meet their minimums to open an account. I believe they are $5,000 for the service class and $15,000 for the investor class.

Please see my post (about two posts after yours asking the above questions) and it will give some tips on reducing this amount and give you URL's for one of many prospectus's and tells you where to find the waiver information.

Feel free to drop me any questions [by PM(private message) or forum] you might develop in verifying this info.

T

[mindofmush]

skiehawk is correct that Profunds is not a good choice for a long term set & forget mutual fund investment.

TSPBuilder chose Profunds because you can make daily moves (IFTs) if you want to without incurring transaction fees. You can apply swing trade strategies to mutual funds without extra costs.

Looking up the performance of USAA vs Profunds, I found USAA's funds to exceed Profund's but only by a small amount in most cases. (The NASDAQ 100 index 10 year comparison being the largest.)
But USAA has only 9 funds without a load/transaction fee and another 20 funds without a load fee but incurs a $45 transaction fee. The rest of the USAA funds have both a load and transaction fee.
All of Profunds products are no load and no transaction fee with as many moves as you want whenever you want.

American mutual funds are required to calculate their fund performance after the operating expenses (12b-1) are deducted so that regardless of a fund's operating expense, the returns can be compared apples to apples. Though, it would be silly to evaluate long term returns for a fund that you'll jump in and out of with a short term strategy.

Even though mutual funds are generally thought of as long term investments, the daily seasonal strategies move in and out of the TSP mutual funds to minimize down times within the constraints of the TSP system.

TSPBuilder does something similar with Profunds without the limits of the TSP nor the transaction limits of the other big fund companies. (Vanguard, USAA, Fidelity)

Expense fees on mutual funds are not the most important consideration for selecting a company to invest with; the flexibility to fit your investing strategy is more valuable.

[baroclinic]

TSP is nice and all, but it sucks with lack of choices for funds. Until Uncle Sam finally starts matching, I feel like the ROTH IRA might be better. Especially if your taking home too much to take advantage of the savings and retirement tax credit at the end of the year.

I'm a bigger fan of the slightly more active funds. USSCX, FBGRX, and VWIGX being my favorites. Sure fees are higher, but usually your paying more for more performance.
FBGRX being Fidelity moderate risk (all that TSLA in it worries me), low fee worth looking at.

Also, if you do a Traditional IRA, your only knocking your AGI down by something like 55% while if your money goes into your Traditional 401K/Employment based plan, your taxable income is dropped for ever dollar. Your better off using employer based for Traditional if your thinking of going that route.

[TSPBuilder]

skiehawk is correct that Profunds is not a good choice for a long term set & forget mutual fund investment.

TSPBuilder chose Profunds because you can make daily moves (IFTs) if you want to without incurring transaction fees. You can apply swing trade strategies to mutual funds without extra costs.

Looking up the performance of USAA vs Profunds, I found USAA's funds to exceed Profund's but only by a small amount in most cases. (The NASDAQ 100 index 10 year comparison being the largest.)
But USAA has only 9 funds without a load/transaction fee and another 20 funds without a load fee but incurs a $45 transaction fee. The rest of the USAA funds have both a load and transaction fee.
All of Profunds products are no load and no transaction fee with as many moves as you want whenever you want.

American mutual funds are required to calculate their fund performance after the operating expenses (12b-1) are deducted so that regardless of a fund's operating expense, the returns can be compared apples to apples. Though, it would be silly to evaluate long term returns for a fund that you'll jump in and out of with a short term strategy.

Even though mutual funds are generally thought of as long term investments, the daily seasonal strategies move in and out of the TSP mutual funds to minimize down times within the constraints of the TSP system.

TSPBuilder does something similar with Profunds without the limits of the TSP nor the transaction limits of the other big fund companies. (Vanguard, USAA, Fidelity)

Expense fees on mutual funds are not the most important consideration for selecting a company to invest with; the flexibility to fit your investing strategy is more valuable.

To whomever it may concern:
Please consider Mindofmush for reputation points on his objective research into ProFunds vs. several competitor's and how the fee's work between them and which work better for buy-n-hold vs capitalizing on short-term stratagies. Thank you!

[skiehawk11]

I agree. I should have clarified that for buy and hold ProFunds are too expensive. For active strategies, I see a benefit to them.

Although I disagree about fees not being the most important factor to investing. In general, for the average investor, fees are most important. Active strategies that utilize inverse funds, leveraged funds, etc is not investing. It's speculation and unless you know what you're doing it would not be prudent to invest in the securities until you understand the additional risks involved.

[TheProfit]

Agree. ProFunds fees are way too high.

[BoozAllen]

ProFunds are not worth the fees.

[GhostRider]

Agree.

[CrocSix]

That's a lot of money indeed.