Pros/Cons of TSP over mutual fund

[MaStA]

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I have been thinking about putting a stop to the money I have going into TSP and just investing the money in a regular mutual fund. I am in the military so I don't get the matched contributions like civil service gets.

I just hate how with TSP you only have till noon to make a transaction where as with mutual funds you have until the market closes. I believe money that goes into TSP it is income that has not been taxed yet so thinking into the future the money will probably be taxed at a higher rate I would assume.

I could be wrong and hopefully someone can shed some light on what their opinion about it is. If I was getting matched contributions it would be a no brainer, but I'm not.

Thanks,
Jared

 

[Birchtree]

Buy individual stocks in a Roth IRA and build your own mutual fund - it's a lot more fun that way with greater potential.

 

[Boghie]

If, between your State and Federal top marginal income tax rate, you are taxed at 30% then the money you put into TSP gains you an immediate 30% growth. Put another way, you will have to earn $130 bucks in salary to put $100 bucks into a post tax account. As far as future taxation - you never know. You only know what you know. Personally, I do not think we will have our tax rates jumped. I think folks will force the gubmint into belt tightening.

Also, ALL mutual fund trades and all mutual fund pricing occurs at the end of the trading deadline. EFTs can be traded interday.

 

[MaStA]

If, between your State and Federal top marginal income tax rate, you are taxed at 30% then the money you put into TSP gains you an immediate 30% growth. Put another way, you will have to earn $130 bucks in salary to put $100 bucks into a post tax account. As far as future taxation - you never know. You only know what you know. Personally, I do not think we will have our tax rates jumped. I think folks will force the gubmint into belt tightening.

Also, ALL mutual fund trades and all mutual fund pricing occurs at the end of the trading deadline. EFTs can be traded interday.

I guess I'm not really following you on the 30% thing. Don't you get taxed on the money you take out of TSP when you retire or is all of that money going to not be taxed? I don't know much about EFT's, but I will have to see if USAA takes part in those...

Thank you,
Jared

 

[clester]

An advantage of tsp is the G fund. It has a guaranteed positive return which is supposed to equal or beat inflation. In other words you won't lose money. It is only available in tsp. almost all other investments have some risk.