TSP Fund Alternatives from Fidelity and Vanguard

For those considering moving their TSP investments to an IRA, here are mutual funds and ETFs that mirror the C Fund, S Fund, I Fund and F Fund of the Thrift Savings Plan. We also look at the G Fund, which doesn't have an alternative.
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Video Resources
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C Fund Alternatives
-FXAIX: fundresearch.fidelity.com/mut...
-VOO: investor.vanguard.com/investm...
S Fund Alternatives
-FSMAX: fundresearch.fidelity.com/mut...
-VEXAX: investor.vanguard.com/investm...
I Fund Alternatives
-FSPSX: fundresearch.fidelity.com/mut...
-VEA: investor.vanguard.com/investm... (tracks the FTSE Developed All Cap ex US Index)
F Fund Alternatives
-FXNAX: fundresearch.fidelity.com/mut...
-BND: investor.vanguard.com/investm...
G Fund:
-Morningstar article: www.morningstar.com/articles/...
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ABOUT ME
While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.
I'm also the author of Retire Before Mom and Dad--The Simple Numbers Behind a Lifetime of Financial Freedom (amzn.to/3by10EE)
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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.
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[@frankofva8803]

Thanks for helping Fed retirees with this video, Rob. I transferred C Fund to Schwab index and left two year’s expenses in G Fund.

[@aaront936]

80% C fund 20% S fund matches VTSAX

[@JonesDJDavid]

The G fund is a special case, indeed. It's made up of a special bond that matures every 24 hours to keep the fund highly liquid. Most folks that I know that are civilians roll most of their TSP holdings that are dedicated to stocks into an IRA. For the safe portion of their portfolio (bonds), they keep their allocation in the G fund. It's the only fund that has never, since 1987, had a monthly negative return. In the investing world, for those that have access to it, there isn't a more safe investment. Folks that lost a lot of money in bonds this year wouldn't have with the G fund. I think it's a very good approach for civilians to keep the bond allocation in the G fund even if they choose to roll everything else out.

[@marydeluca9746]

⁹

[@marydeluca9746]

⁹⁹99⁹

[@Mach141]

The G fund cant have a negative return. Its impossible. But it pays crap. You could probably earn more interest in a regular bank savings account.

[@JonesDJDavid]

@@Mach141 not entirely true. It hasn’t earned traditional returns, but over the lifetime of the fund it has beaten inflation. It’s purpose isn’t to beat the S&P, but to protect from downside risk. It’s excellent against protecting investors from sequence of returns risk.

[@Rdominca]

Thanks for the comparison and for cutting to the chase with the links. 2022 taught those of us who pay more attention to our day jobs the meaning of "duration" as used in bond investing as total bond funds plummeted along with S&P funds. It taught those of us in FERS why we have a good thing with the G fund, and it showed me why I will continue to put up with the BS of TSP managers after retirement and try to convey this to my non-Fed spouse in case she becomes my survivor.

[@SirAnthony25]

I always look forward to your newsletter, it’s awesome!

[@josephhopkins5620]

Thank you Rob. Much appreciated advice.

[@dmargo5872]

A disadvantage of partial tsp withdrawals in is they are pro rata. You can’t pick which funds to withdraw. This can be somewhat mitigated with inter fund transfers before a withdrawal. A minor inconvenience in my opinion.

[@pilgrimtiger2023]

Thanks Rob. TSP & Fidelity contributor, interesting video.

[@Gone_Flying]

Thanks for this video! Very helpful!

[@tomgriffin3800]

Great video, Rob. If he wants, his TSP can be left intact with the government during retirement and there are several withdrawal options to take it directly from the TSP or annuitize it. You do not have to transfer it into an IRA if you would rather not. I have been retired 7 years and have not started drawing on it yet.

[@aaront936]

Keep in mind if you have a roth tsp the tsp requires Rmds even on roth assets.

[@alrocky]

@@aaront936 From TSP site: Roth balances will *no longer be subject to RMDs*

[@edmundfong7288]

As a federal retiree still cheating in G Fund but also as Fidelity customer, I suggest looking at Ishares ETFs to replace TSP's low expense ratio, suggest IDV in brokerage, suggest IEMG in Roth as I fund is too broad and too core. Is TSP customer service better? No need to repeat asset allocation and location among IRA/401k, Roth, and brokerage.

[@zamin_ali]

@07:12 The incorrect expense ratio was pointed out in the video. When comparing one should compare the Total Expense Ratio of the F Fund to the Expense ratio (Gross) of the FXNAX Fidelity fund. Total Expense Ration for F Fund is 0.058%. Expense ratio (Gross) for the FXNAX Fidelity fund is 0.025%. This is a huge difference in the amount of money your investment will have to use/grow over decades.

[@danmalone7639]

Rob, it may be helpful to point out the the current date return on the Fidelity 500 Fund (and most other funds, as well as other fund families) only applies to returns with an asterick -- which is solely the year-to-date (YTD) return. The asterick is not attached to the 1, 3, 5 and 10 year returns, which are all calculated as of the end of the previous month. This was not clearly stated in your video. Dan

[@jameshall2299]

I have about 430k in the tsp Gfund. I was thinking of rolling that into a vanguard brokerage account and buying a brokered cd currently paying 4.7%.

[@asandrik3124]

Rob, this is GREAT but could you show some examples of the TSP funds in the Portfolio Visualizer Monte Carlo Simulation using the options like the GARACH Model (what the heck is it really), reasonable forecasted returns, resasonable inflation volitility and how to format a CSV file to upload (been totally unsucessful there). I'm in the upper 1-2% of TSP holders and to be honest based on this and other Monte Carlo Simulations I put off my retirement for an additional year because I get such wild results!!!!!!!! I've been trying to make sense of this tool to use it for the TSP but again I go anywhere from totally broke in 10 years to $10M at 40 years. BTW because of my wife's and my age difference been running it for 40 years.

[@deshwitat357hedge7]

Could the difference in returns be due to how TSP treats dividends? I believe they're included in the returns and never as distributions.

[@edmundfong7288]

IMHO, one way TSP keeps expenses down . Employees get matching but retirees would love to see dividend shares to offset dollar withdrawals.

[@donkelly9760]

I was told in a retirement seminar that TSP something not available elsewhere. It rebalances your portfolio nightly. You can rebalance manually in many places but I don’t think anyone does daily on an automatic basis.

[@asandrik3124]

I do not believe that the TSP rebalances the standard funds nightly, or at all. The F Fund allocations are rebalanced by the fund manager but that is on a quarterly basis but that is the only rebalancing by TSP I am aware of.

[@scarfinger68]

@@asandrik3124 Only the Target Date Funds are rebalanced daily in the TSP

[@PH-dm8ew]

want to transfer tsp to fidelity or vanguard for ease of access to money and broader investment options. A bit nervous to do so because it is so easy to move between funds. The new website is terrible and really want to get out of it though.

[@carlbook2051]

I retired, and after some thought, I decided to withdraw all of my TSP money and transfer to my discount broker. I then bought low cost index funds, similar to the the S fund. I believe the expense ratio is lower, and it is in my IRA account so I have all my retirement money in one place. The treasury department sent a check to my broker. It took three weeks for my broker to post it to my account. It was in July of this year and I have no idea who was responsible for the delay. The market moved up during that period so I sold low and bought high. I would have tried to do an electronic transfer if I had to do it again. I would recommend the transfer with the caveat about trying to speed up the timing. Good luck.

[@Crispin38]

The old TSP site was better, IMO, idk if old site had these same rules, but having recently separated (doing postponed retirement) and planning to supplement my income from TSP. Anyway, it seems that you can only setup one partial distribution or monthly distribution every 30 days. I setup a monthly distribution for 2023 and wanted to also do a partial distribution to an IRA so I can do some annual ROTH conversions, but TSP site told me I have to wait 30 days for do any other distribution. 😞

[@Yette]

Gotta agree, the new TSP site & App are unimpressive. Every other banking App I use is next generation compared to the TSP. The TSP board & Congressional oversight have really done a disservice to members, not to mention the widely reported problems folks have encountered with customer service & transition

[@bobsandone3108]

What exactly is a "thrift saving plan"? How does one get involved in a TSP? Why would I want to get involved in one? Thanks !!

[@JMBWizard84]

TSP is the federal governments 401k plan. You must be a federal employee.

[@scole4545]

This if offered only to Federal Government employees. It’s part of our three tiered retirement system

[@venchenzo4493]

federal government employee or military

[@bobsandone3108]

@@JMBWizard84 Thanks

[@steveviscidi6090]

Rob I love your channel. You along with the Merriman group are my most informative and trusted source for investment information. But I strongly disagree with you when you said that you can cover the entire market with a total stock mark fund the same way you can with and a combination of a S&P 500 fund (like the TSP C fund) and one that covers stock not in the S&P 500 (like the TSP S fund). Since these funds are all capital weighted, a total marked fund is dominated by large companies and is not really much different than an S&P500 fund. Whereas if you had half you money in the TSP C (S&P 500) fund and half in the TSP S(Extended Market index i.e. companies not in the S&P 500) fund, half your money would be in medium and small Companies.