Military members who have Thrift Saving Plan?

Question

I'm 20 years old and in the Air Force and i just started a thrift saving plan (L Fund). For those of you that have TSP, is it actually any good? I mean, it's like a 401k but the main reason why i created an account was because i heard TSP would match 5% of your contribution. I later found out that, that was for civilian government employee only, not military members. I also have a Roth IRA with $10,000 saved up. So, should i stop contributing to TSP and put more money into my Roth IRA? Or still invest in TSP??

Answer 1

Invest in both! I also have both but in my TSP I've got it going to L series and G series for balance. Keep that IRA growing. The TSP is good because it offers a higher rate of return then a IRA but it is the stock market and with the housing slump, oil reaching 90+ a barrel it could go down fast and you could be out some cash. Keep both going. You are way ahead of most 20 year olds and should have a easy retirement when it comes around.

Answer 2

You have asked a question that many here SHOULD know about and at the age of 20 with 10K banked you get a big BOOOOOOYAAAAAHHHHH.

As you are not making big bucks at this time the tax deduction is not going to make a big difference. However if you can get any matching funds I say put in what you have to to get the max out of that.

Funding the ROTH still has the tax free perk at the end of the tunnel. You are probably aware of the withdrawal penalty differences too. You can do both.

As a young man you can build a bloody fortune in either type account. If you have the nerve you can play a portion up big if you learn the market.

Example: When I went self directed I lost $3000 so fast it made me determined to fix the problem. I turned to a combo of Jim Kramer, Kudlow, Cavuto and Bulls and Bears on Sat. morning. I gained back the 3K + in 6 months. I also have taken another taxable acct. up 51% in 3 years. All by watching for trends. Otherwise it's Funds the whole way and lower returns.

The high risk amount should not exceed 20% of total assets. Find a sector you like (mine is energy) and play poker.

Warren Buffet started at 15. Proof that starting at the bottom can take you far.

If you decide to play the market do it on paper first. You can buy funds or blue chips until you feel confident with the different pundits ( they are not all smart) and yourself before risking that 20%. Spread the load in different sectors too. Not being diversified WILL make your head spin when the market burps, corrects, etc.

Good luck! Retire young!

SSG US Army 73-82 Long before all these lovley things were available.

Answer 3

don't stop contributing but don't put in as much. ok breaks down like this. you know how you don't get tax benefits for the roth right? well the tsp has the same tax benefits as a 401k. so if you do that then depending on your tax bracket you may be eligible for a savers credit for your taxes. but it's not available for the roth b/c the roth is funded w/ after tax dollars which you can touch the money that you put in but not the money it earned; tsp, 401k, traditional ira are funded with pre-tax dollars that you can't touch until 59 1/2 and is tax-deferred. so basically if would put like 3% of your pay into tsp which is enough where it won't be missed. and everytime you get a raise or something raise it one percent. and put any extra after tax money into your roth (provided you have money for your emergency fund)

Answer 4

Honestly I would keep on investing in both. Always a good idea to have something to have as a back up. I'm 27 been in the military either active or Guard for the last 9 years and I wish I would've got into TSP when it first started!! TSP will give you more money and granted it goes off of the stock market, but still a good idea. There are different funds with a higher kick back rates also within TSP. But keep both of them goin just be safe!!

Answer 5

God Send!!! In only about 6 years I have managed to save > $20K. (That is despite the fact I left it in the G-funds for entirely too long.) Even better is the fact that I don't feel the hit, & I don't have to manage it.

I stongly support the TSP program. As far as which is better, TSP or Roth IRA. The one clear benefit is that the L-funds automatically adjust, meanwhile you may have to watch/reallocate your IRA. BUT!!!, Talk to a financial planner. You might have someone qualified in the Airman/Family Readiness Center.

Answer 6

I have the TSP and from what I have heard it is better to switch to a Roth IRA. Sorry I couldn't be more help.