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TSP Answers Frequent Questions About Trading Restrictions

1 OPTION NOT CONSIDERED - WHY?

Sys Engr
DOT/FAA
Sun Dec 2, 2007 10:17 PM

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Permit trades in excess of 2 per month to be paid for by the employee. Or allow unused trades to be carried over from month to month. I re-balance 2 to 3 times a year and have holdings in the C, S, I, and F funds. Under the proposed restrictions, I would not be able to re-allocate or shift monies between more than 2 funds during a one month period. I am not a trader, but will be adversely affected because of this restriction. I would be willing to pay for the additional trade fees over the 2, but the TSP board hasn't made that option available, yet.

Make the frequent traders pay us back!

IT Specialist
DISA
Mon Dec 3, 2007 7:18 AM

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I don't often rebalance my funds, knowing that the market fluxtuates and constantly moving your money around defeats the purpose of long term investing. Those (3,000) individuals that traded in the I-funds frequently and incurred costs for the rest of us TSP participants should know this. Instead they let their greed get the better of them at the expense of the rest of us! TSP has been talking about this issue for a while now, yet people still continue to do frequent "re-balancing", because the don't care. I think the TSP board should charge these "money mongers" a one-time fee and put it back into the overall TSP program so that the rest of us get reimbursed over this!!

Re: Make the frequent traders pay us back!

Budget Analyst
Army
Mon Dec 3, 2007 9:21 AM
Hmmm.... I should pay you back for trading what I am VESTED in because I was smarter and quicker than you were and thereby made BIG MONEY in the past 7 months by trading as I saw fit with MY VESTED MONEY? I don't think so. If the shoe were on the other foot, you surely wouldn't be asking me to pay you back, now would you? I've worked for the Army for almost 21 years, and all the money I have in my TSP account is MINE to do with as I please. I worked long enough that I am fully vested in it, meaning it's NO ONE ELSE'S. So whose money am I trading but my own?

Re: Make the frequent traders pay us back!

Safety Inspector
FAA
Mon Dec 3, 2007 11:03 AM
To the Army BA - the money you were trading is yours, but the cost of the trading was borne by all TSP participants, so reimbursement would be appropriate.
But don't get worked up about it, it will never happen.

$142 Million in costs caused by 3000 investors

Engineer
USACE
Mon Dec 3, 2007 7:52 AM

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$142,000,000 divided by 3000 investors works out to added costs of about $47,000 per each of those investors.

Perhaps those investors ought to be glad the TSP isn't going after them for these increased fees (or their fellow investors). I expect that if those fees were taken into account, their returns wouldn't be nearly as rosy as they proclaim.

And for those who talk about the costs of trades being so low in commercial brokerages like etrade, thats because you're playing only with YOUR money and YOUR stocks, not everyone elses that is in the same retirement savings and investment plan you are.

Thanks again to the TSP board for recognizing and dealing with these traders, and looking out for the rest of us involved in the plans.

Re: $142 Million in costs caused by 3000 investors

software engineer
NAVAIR
Tue Dec 4, 2007 11:00 AM
That was $142,000,000 in trades, not costs. The costs were stated as about 8 basis points which comes to about $113,600 ($.80 per $1,000). $113600/3000 = about $80 each of the 3000. They say that the frequent trading exacerbates the problem so, suppose the costs were $300,000 (according to the figures they gave us this should be quite higher than actual but in any case in the ball park). If there are 10,000,000 investors in TSP (I believe to be way low) that is $.03 (three cents) for each of us (I'm not a frequent trader, I make maybe 6 xfers per year). I'll contribute three cents a month to have the option of frequent trades if I were to choose. This is a perfect example of lying with figures. The net amounts are insignificant so we'll quote using gross non-normalized values to exagerate the apparent problem.

Re: $142 Million in costs caused by 3000 investors

DoD Employee
DdD
Thu Dec 27, 2007 12:06 PM
The costs were not only borne on the just the $142 Million traded. It as borne across the entire fund. So yes it does costs us when people trade constantly. The TSP is designed as a long term retirement account. If people want the option to trade daily then they should open them a day traders account elsewhere. Lets see if see if someone else wants to fund their trades. Oh, I didn't think so.

Why wait!

Logistician
USAF
Mon Dec 3, 2007 8:58 AM

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The TSP management has got the problem right.
Why wait til April "08? Move now!

VOTE for EMPLOYEE REPRESENTATION

Manager
USDA
Mon Dec 3, 2007 9:02 AM

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This is the reason WE NEED EMPLOYEE REPRESENTATION so our voices may be heard on the board.

Interfund Transfers

Management Analyst
DHHS
Mon Dec 3, 2007 9:18 AM

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Very simply, those whose funds get traded daily in the L funds won't pay for those transfers. However, those not in the L Funds will pay after two or so. Can anyone else see the pressure for everyone to get in the L fund if they want to hit the up times in the funds?

Re: Interfund Transfers

Budget Analyst
Army
Mon Dec 3, 2007 9:33 AM
Interesting thought. It makes me wonder who is managing the L Funds and how much they are getting PAID to manage them and how much more they would make if more people started to change over to those funds vs managing our own funds in the current TSP system???

Re: Interfund Transfers

Gen Sup Spec
NAVICP
Mon Dec 3, 2007 6:49 PM
Whose brilliant idea was it to invent the L Funds and how much did that cost us? I don't hear anyone complaining about that. And why do trades cost so much? Isn't everthing electronic? Why does it take so long?

False Information

Scientist
CDC
Mon Dec 3, 2007 9:28 AM

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The trading information regarding Fidelity is false! I trade international funds through Fidelity and there is only a "short-term trade fee." Please allow us to pay the extra 5 basis points per trade for more than 2 TSP trades per month. It would slash expenses and still allow some of us to make money in months like Nov. '07.

Re: False Information

DoD employee
DoD
Tue Dec 4, 2007 5:53 AM
Speak for yourself - I have no interest in paying 5 extra basis points for someone else's excessive trading habits. TSP is a group investment - the best interests of the group must be the primary consideration of the TSP Board. If you don't like participating in a group investment, my suggestion is to get out of it and get your own IRA that you can play with to your heart's content without affecting another's returns.
Total Comments: 51
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