Leave TSP for High Yield Dividend Growth ETFs

[Scarfinger]

A 2.5% advisory fee seems high, even if that figure includes mutual fund fees, if such equities are included in the portfolio Retirement Protection Solutions proposes for you. (Aside: Why is it so fashionable to put "Solutions" in company names these days?)

Lower rates are out there for managed accounts. Major companies (Fidelity, Schwab, etc.) have advisory fees that start somewhere around 1.5% for modest portfolios (far less than $1M) and decrease as the value of the portfolio increases, perhaps around 1.0% for a $1.5M portfolio.

Regardless of who you go with, be it a well-known company (Schwab) or someone hanging his shingle in the DC area (Larry), you should be provided a detailed explanation of how the fee is calculated and how and when you'll pay it. It can be complicated, so read through it carefully. Don't be shy about asking follow-up questions if something isn't clear. The idea here is to determine if the fee is likely to provide value added.

I agree with Blue. The fees are too high. They are selling you on "we can do it better" with their proprietary formula of active trading. Active trading historically underperforms index funds. The longer time period, the worse active managed funds perform. On top of underperformance they charge you more for it. Check out the SPIVA report card.

https://www.spglobal.com/spdji/en/index ... ive-debate

[twinkc]

Hi All. Quick update: we've decided to stay put for another year; me in TSP and my spouse in UBS. I'm considering moving some of my TSP into one of the life cycle funds. This will give me more time to look into some other ETFs like JEPI and QYLD mentioned by a few of you as well as read up on some of the financial tools suggested here.
That said, can you advise on how one would purchase individual ETFs? --I'm guessing I would have to buy through a broker or brokerage firm?
Thanks again everyone for your input.

[Scarfinger]

https://talkingrealmoney.com/compare

[Blue_Radio]

...can you advise on how one would purchase individual ETFs? --I'm guessing I would have to buy through a broker or brokerage firm?

Yes, you can purchase exchange traded funds (ETFs) through a brokerage account. No big deal. You can do this entirely on line by choosing a brokerage firm (e.g., Schwab, Vanguard, whomever), setting up an account and doing the trade(s) yourself without involving any human other than yourself.

[Scarfinger]

am comfortable with the overall strategy, but I am concerned about the 2.5% advisory/administrative fee that Larry and his team takes. That is if I were to receive (hypothetically) an 8.5% dividend rate on ETFs, he and his team would get 2.5% of it, reducing my dividend rate to 6%.

A 2% fee according to Vanguard:

Imagine you have $100,000 invested. If the account earned 6% a year for the next 25 years and had no costs or fees, you'd end up with about $430,000.

If, on the other hand, you paid 2% a year in costs, after 25 years you'd only have about $260,000.

That's right: The 2% you paid every year would wipe out almost 40% of your final account value. 2% doesn't sound so small anymore, does it?

[ubascuba]

Why would anyone want to leave seasonal investing? I've been averaging 18% for the last 4 years. That includes a almost 10% loss in 2022 due to my own fault.

[twinkc]

Thanks all. Great advice here. I've decided to stay in TSP after all---at least for a while anyway. Since I'm retired and living off pension and social security, I've decided to move my TSP balance into the life cycle funds (L2040) where I hope not to be checking on it all that often (and it's making a good return right now).

[bloobs]

I read a lot stating that they can live off with their Fed pension and SS income entirely. By pension do you mean generous CRS or DoD pensions (not FERS), and do you all live in low cost of living areas in the USA (meaning not the West Coast or Northeast)?

[tnwhiskey]

Why would anyone want to leave seasonal investing? I've been averaging 18% for the last 4 years. That includes a almost 10% loss in 2022 due to my own fault.

Great question. But you know many of us (myself included) have other "systems" or analysis we follow that clutter the gray matter and we end up getting off seasonal path from time to time