Tiaa-Cref Agrees to Cease Misleading TSP Rollover Ads

[Miss_Piggy]

Tiaa-cref agrees to cease misleading tsp rollover ads, fidelity does not follow suit:
http://aging.senate.gov/record.cfm?id=301453

 

[luv2read]

http://www.tsp.gov/forms/highlights/high08c.pdf

Running scared that boomers have seen the light?

 

[alevin]

http://seekingalpha.com/article/91162-fixed-income-investment-vs-paying-down-debt?source=yahoo

When we are investing for retirement we will eventually have to pay tax on the invested funds and the gains made by those investments (unless we invest in a Roth IRA).
The previous point is the key because paying down debt provides us with an absolute guaranteed return equal to the amount of the interest rate we are paying on the loan. Conversely, investing for retirement requires that tax be paid on the money when the investment is cashed in or withdrawn from a sheltered account. My interest rate was 6.625 back in 99, I never got around to refinancing due to inertia.

Fixed income investments, such as bonds, are the closest thing that is comparable to one’s debt or more specifically a mortgage.
In light of the risk adjusted return calculations, it is possible to get an acceptable return on investments in equities but highly unlikely that an investment in bonds or other fixed income that could beat the return (especially after tax) from paying down debt.
Because of this, I highly encourage investors with outstanding debt (including a mortgage) to consider allocating the “fixed income” portion of their portfolio to reducing debt. It makes sense mathematically, it helps improve your credit score and it feels good to know that your debt is being reduced more quickly than originally planned.

This is the kind of information that convinced me to pay off my house early, even if it meant only contributing 5% to my TSP for a few years and use the other 5% to pay down the mortgage.

 

[GarySpicuzza]

alevin,

You're a very smart person.

Also take this mathematical fact into consideration using an $800 per month principal and interest mortgage payment:

By paying off your mortgage the $800 per month stays in your pocket.

$800 per month times 12 months equals $9,600 per year that you don't have to pay out of current income.

Now, how much money, cash on hand, would you have to have to safely generate $800 dollars per month income from any investment vehicle earning 5% per year?

The answer is $192,000.

That's the cash on hand dollar amount one would need at 5% interest to earn $800 dollars per month interest.

Most people would be quite pleased with themselves if they had $192,000. That's the mathematical equivalent of NOT having to pay a mortgage bill.

Don't believe so called financial expert bllsht about the tax deductibility of mortgage interest. That's mortgage banker talking points and flawed math.


Too bad the United States Federal Government doesn't understand that you can't get out of debt by borrowing money.