Q. I read your article on how to be a good pension fund manager today and, in regard to moving your money from the Thrift Savings Plan after you retire, you left out the biggest obstacle to leaving it in: You cannot add another penny of contribution for the rest of your life.
Also, in regard to better results outside of the TSP, would you say that if you can beat the market indexes, which TSP is based on, you can beat TSP. Join up with the American Association of Individual Investors, whose model portfolios have smoked the market averages by a wide margin for years.
Also, when I retired recently, I moved my TSP to Vanguard and put the money in five different funds, with very, very low expense rates. From October 2012 through today, my return annualized is around 40 percent by reinvesting dividends and the earnings and I’m using one very conservative fund, Vanguard Wellington, for some of the money. I don’t have it all invested like sheets blowing in the wind. I’ve got it in health care, dividend growth, small caps and mid caps.
During my experience in the federal government, 34 years, the main thing I saw in TSP participants is that they need training to be a good fund manager. I retired as a garrison accountant but was the senior auditor for many, many years. I can’t tell you how many people came to me and my co-worker asking where we had our money and what should they be doing. They all wanted me to send them an email when I moved mine. Hence … training needed.
A. Not being able to contribute is in no way an obstacle to leaving your money in the TSP. The AAII model portfolios have not “smoked” the market averages by a wide margin for years when you consider the risk they produce. And a six-month track record as an investment manager is hardly convincing evidence of any special brilliance.
