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"Isn't the I Fund Risky for a Conservative Investor?"

The big picture

Analyst
DoD
Tue Nov 6, 2007 11:22 AM

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Anytime you put all your money in only one type of stock fund (be it C,S or I) your total risk goes up. The way to reduce risk is to allocate between all three and periodically rebalance since they rarely go up and down in the exact same patterns. In other words... a portfolio split between C,S and I is less risky than one split between C and S.

PRIVATE SECTOR TRANSFERS TO TSP?

ANALYST
VA
Tue Nov 13, 2007 10:38 AM

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I would like to know about a option that was mentioned on a Fedsmith article from WA Post 11/12/07. How does one transfer "private sector" savings into TSP? I didn't realize that we could do that.

Many mid-career hires also are transferring their private-sector savings into the TSP, in part because of its low overhead cost, about 30 cents for each $1,000 invested.

Re: PRIVATE SECTOR TRANSFERS TO TSP?

Analyst
DHS
Tue Nov 13, 2007 1:20 PM
That just means you can do a direct rollover of funds from eligible retirement accounts (401k, IRA) into your TSP account. Not a special feature -- every 401k allows for it , but people in both the private and public sector often overlook this when changing employers. Just use form TSP-60 from the TSP web site if you're interested.

http://www.tsp.gov/forms/tsp-60.pdf

Re: PRIVATE SECTOR TRANSFERS TO TSP?

Analyst
DoD
Tue Nov 13, 2007 4:27 PM
This situation can be treated like a rollover. As long as the funds go from one plan directly into another there are no tax consequences.

I would think carefully before doing this though. The TSP is a good (but not great 401K). The chief advantage of 401K plans over IRAs is that contributions to a 401K can be made with pre-tax dollars (therefore reducing your taxable income). That advantage would not apply to a rollover since the money has already been contributed to a retirement plan (the IRA).

A really good IRA will outperform the TSP over time. The low fees of the TSP will be more than made up by better investment performance of a really good IRA.
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