personal finance
Finance Friday Articles
- 529 Plans – A Fantastic Tax Break for the Rich
- 7 Reasons Not to Have a 100% Stock Portfolio
- A Midyear Update on Vanguard’s Economic and Market Outlook
- A Million Chances to Fail
- Fueling the FIRE movement: Updating the 4% rule for early retirees
- Hacking Wall Street: Could a Cyberattack Disrupt the Financial System?
- How a Little Bitcoin Can Change Your 60/40 Portfolio a Lot
- How to Avoid Losing It All
- How to Invest When Interest Rates are Low
- In Defense of Global Stocks
- Money Rules
- Planning a PCS Move? How to Save Money (and Stress Less)
- The Most Ignored Investing Premium – Rebalancing
- The Stock Market Just Doubled
- Top 10 Rules for Money
- TSP Will Offer ESG Funds
- What’s Driving the Stock, Bond, and Housing Prices Right Now?
- Why We Struggle
Finance Friday Posts
- 16 Unbelievable Facts About the Markets
- Doing Nothing is Hard Work
- Finding Merit in Attending College
- For Inflation Protection, Commodities Belong in the “Too Hard” Pile
- House Prices Continue to Surge
- How Often Does Dollar Cost Averaging Fail?
- Mid-Cap Stocks are Far From Middling
- Get 80% of the Benefits of Real Estate Investing with 20% of the Work
- Ownership Is the Key to Tax-Free Wealth Accumulation
- Public Service Loan Forgiveness
- Skimping on Cash
- The Unspoken Risks of NOT Retiring Early
- Vanguard is Adapting to Stiff Competition
- What You Need to Know About Estate Taxes
- Why Aren’t Interest Rates Higher?
Finance Friday Articles
- 5 Morning Habits of Successful People
- Fed explores ‘once in a century’ bid to remake the U.S. dollar
- Get Financial Advice First, Investment Advice Later
- How Much Do You Need to Be Financially Independent?
- How to Prepare for a Lengthy Bull Market
- My SPAC Experience
- Taking Precautions
- Tax-Efficient Investing and Asset Location Optimization
- The 60/40 Portfolio Ain’t Broke
- The Misguided Faith in the Fiduciary Standard
- What Goes Down
- What’s an NFT?
- What You Need to Know About Inflation
- Will Bitcoin Crash the Stock Market?
- You Can’t Do It All Wrong
Finance Friday Posts
- 9 Money Principles I’d Tell My 17-Year-Old Self
- Charles Schwab & Co. dials in what it may consider SEC’s all-clear signal on bitcoin, while Vanguard’s take includes nothing to turn a red light green
- Drive a Beater and Get Rich
- Favorite Financial Rules of Thumb
- I Bonds – Good Not Great
- Investment vs Speculation
- Lessons from a $69,425 Homeowners Insurance Claim
- Taking Sides on 5 Controversial Financial Issues
- The ugly truth behind your fancy rewards credit card
- This proposal would increase troops’ max life insurance to $500K
- What Investment Return to Expect from Stocks Over the Next 10-15 Years
- Why Interest Rates Have to Stay Low for a Very Long Time
My New Personal Finance Guide and Finance Friday Posts
I’ve created a very brief guide to personal finance that can set you on the correct path. You can find it here:
Here are this week’s articles:
- 5 Major Things to Look for in a Real Estate Fund
- 200+ Years of Asset Class Returns
- Affluent Americans Rush to Retire in New ‘Life-Is-Short’ Mindset
- A Loophole Makes ‘529’ Plans Good Wealth Transfer Tools. Here’s How to Use Them.
- Avoid Extreme Portfolios
- Conservative Investments Serve as Portfolio Insurance
- Finance Website Ranks Best, Worst States for Military Retirees
- Illusions of Safety
- Indulge and Enjoy Life Along The Way to FI
- INSIDE THE RISE AND FALL (AND RISE AND FALL) OF SHIT COINS
- Monitoring your risk level & rebalancing
- My Many Real Estate Investments
- Pros and Cons of Donor-Advised Funds
- Special Purpose Acquisition Companies: 8 Reasons Why I Don’t Invest
- The Emergency Fund: It’s Still Useless!
- What a Drag
Finance Friday Articles
- 4 Lessons From the Crypto Crash
- 10 Best Real Estate Investing Blogs for Doctors in 2021
- Getting Framed – How You Should Manage Your Limited Time and Money
- How to Avoid Foolish Behavior
- Is Now the Time To Cash Out Some Home Equity?
- Problems With Picking Individual Stocks
- The Value of a Financial Advisor
- What Are ARK Funds? Should You Buy an ARK ETF?
- What’s the Point of a Trust?
- Why rises in bond yields should be only modest
- Why We Own Bitcoin
Finance Friday Articles
- 4 smart ways to find balance as an investor
- 5 common investing myths
- Challenging My Retirement Assumptions by Reading “The Deficit Myth”
- Don’t Succumb to Fear of Missing Out with Your Investments
- How to Get Wealthy Investing in a Bear Market
- If You Don’t Know Whether A “Target Date” Mutual Fund Is For You, It Is!
- Live Like a Resident
- The Future of Bear Markets & Recessions
- Why I Keep My Rusty Car
Why are the TSP Investment Expenses So Low?
The Thrift Savings Plan (TSP) is known for its low cost investments, and the lower your costs the more of your investment gains you get to keep. But why are the investment costs in the TSP so low?
Check out this table from the January/February 2018 TSP newsletter:
Let’s examine the fine print, using the C Fund as a good example because it is equivalent to an S&P 500 index fund you would find at Vanguard, Fidelity, or any other investment firm.
First, note that the C Fund had gross administrative expenses of approximately 0.052%. The gross expenses are the costs of administering the TSP and include:
- The costs of operating and maintaining the TSP’s record keeping system.
- The cost of providing participant services.
- The printing and mailing of notices, statements, and publications.
That, however, is not what investors get charged. We get charged the net admin expense of 0.038%, which is highlighted by note #3.
Note #3 reads:
“Net administrative expenses are the expenses charged to TSP participants per dollar invested in the respective funds after offsetting gross administrative expenses with account forfeitures and loan fees.”
After “offsetting gross administrative expenses with account forfeitures and loan fees.” In other words, people who forfeit their account and borrow from their TSP help lower the fees for those who don’t.
Another portion of the TSP website provides more details:
“Expenses are offset by the forfeitures of Agency/Service Automatic (1%) Contributions of FERS and BRS participants who leave Federal service before they are vested, other forfeitures, and loan fees.”
When someone gets out before their federal contribution vests or they pay loan fees, they are lowering the investment costs for the rest of us. This is a major reason why the TSP’s expenses are so low.
For example, while we get charged 0.038% for the C Fund, the expense ratio of the Vanguard S&P 500 Index Admiral Fund is 0.04%. This is higher than the TSP C Fund, and we can thank those who take out loans from their TSP balance or get out and forfeit their government contributions.
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