They have one goal and one goal only - separate you from your money. Banks were not built making profits for everyone else. They were built to churn out profits and they are setup to get their piece of the pie first then pay you the left overs.
At 27, I've educated myself through reading books like "Rich Dad poor dad" "Money:Master the game" and taking college courses on the side while obtaining my engineering degree. In addition, I've seen firsthand all the warnings nearly EVERY decent financial book warns of -- DO NOT entertain your local financial advisor PROMISING RETURNS w/"low rates."
Did you know 97.8% of all personal financers FAIL to beat the market over a 10-year cycle (S&P500 as benchmark). And the 2.2% that do manage to beat the market either don't offer services or require such an astronomical investment to participate that we will never have access to those advisors.
You can realistically make 3-6%/yr (conservatively speaking) pretty easily in TSP w/minimal fees (0.026% is INSANELY LOW). Paying someone 1.6% with absolutely NO guarantee he/she can make you any money or even break even. Take ownership of your money.
These jokers bring you in the office throw finance terms around, make you feel overwhelmed, and sell you a pipe dream that 9.7/10 times can't be achieved by an active or managed account. They literally overwhelm you and get you to believe you don't know what the hell to do on your own to manage your own money and they make you believe not only should you stay far away for the market as an inexperienced investor you should let them manage your money that you have worked so hard for your entire life. The first couple years you break even but really lose A LOT since your paying ROBUST 1.6% fee. Then the market has an unexpected downturn and your investment goes down, but guess what? You still pay 1.6%. Before you know it, you need to make 25%+ return just to recover a "correction in the market" (8-12% drop) over 3 years to offset the loss + yearly fees.
crondanet5 wrote:And so it is with the cheapness of the TSP Program. You got a half a million bucks in there and you complain about a higher fee? What if the nonTSP investment paid double for a few pennies more? Talk to Tractor. He is my hero.
All funds will have some type of annual expense ratio. The TSP's net expense ratio is 0.029% = $0.29 per $1, 000 or $29 per $100,000 invested. Higher fees are OK if they provide better outcomes but I agree with kaclemen. Nothing that caddisfly said, however, indicated any better outcome with 5-6% return.
They are probably looking at a Balanced-Allocation Fund (Stocks & Bond Mix) or Growth/Equity-Income type fund which focus primarily on blue chip/dividend paying type of stocks. Stock exposure isn't necessarily a bad thing like ArrieS seems to imply.
Take American Funds, for example, which is popular with brokers as they have long track record for many years--Returns for American Funds https://www.americanfunds.com/individua ... ed=monthly Class A shares have high upfront load fee + an expense ratio that is below 1% for most funds. Most of the folks here would probably say that a front load of 5.75% is outrageous, but in comparison to a 1.6% annual fee for 20+ years, it sounds reasonable...so fees are relative. Some companies charge a fee to each account below a certain dollar amount which varies by company. Anyone that is considering transferring outside of TSP should be fully aware of all fees or expenses associated with the firm and the proposed types of investments they are proposing. If they are going to put you into mutual fund, do you really want to pay 1.6% fees annually? Given the new DoL rule, that may be more likely in dealing with any full service brokerage company.
I left the TSP, because TSP wanted to charge me 20% Federal taxes on my withdrawals, had no way of withholding State taxes (that was my problem). Guess what I don't need to withhold 20% on my Federal taxes. Only got to change my monthly withdrawals once a year. What if I wanted to buy a car?
Buy Vanguard ETF's to match your TSP funds. VOO - C fund, VXF - S fund, AGG - F Fund, EFA or VGK - I fund. Mix and match as needed. No company has anything like the G fund. It will just be in cash. Most Vanguard ETF's are .05% to .09%, so not as good as TSP .0021% but much better than 1.65% from financial planner.
I left the TSP, left my financial planner 1%, very happy overall. Most people are leaving the financial planners and hedge funds because the ETF's / TSP Funds beat them time and time again.
Set up automatic monthly withdrawals and take out taxes fed+state with each withdrawal. Each time you take out extra money, other than monthly, take out taxes fed+state.
File for Social Security at 64 or 66 and cut back on taking money out of your IRA funds. Some people say wait until you are 70, yes this is the maximum SS but not how to maximize your IRA account.
Watch this website to see where is the best place for your money. You will do great.
Pending AllocationsUnder development. For now, you may view Pending Allocations by going to "fantasy TSP" and selecting "Leaderboard sort" of "Pending Allocations".
What else"Don't ever half-ass two things. Whole-ass one thing."
- Ron Swanson