investment

[rib50]

Hello everyone,

I was wondering if any one has used USAA or NFCU financial group for investment. I am just planning to start investment- - stock or mutual fund and thinking to use either of these banks or another company such as Vanguard.

Thank you

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[colbgw02]

My amateur advice is that you should use Vanguard, specifically their index funds. Their expense ratios are very low, and using index funds minimizes the required research. This is assuming you are maximizing accounts that convey a tax advantage (e.g. IRAs, TSP). USAA is very good at insurance and - to a lesser extent - banking, but I think their investment services leaves a lot to be desired. Don't know anything about NFCU, except that their mortgage and car loan rates are supposed to be good.

 

[rib50]

Thank you so much.

 

[colbgw02]

I should have mentioned that you should check out the White Coat Investor website. Apart from being a very good website, the author is a former military emergency medicine physician, so he has some military specific information. I believe he also recommends some good books on basic finance, although - admittedly - I haven't taken that advice thus far.

 

[rib50]

I was reading through that website earlier, and it has very nice information. Thank you again and I really appreciate it.

 

[pgg]

Step one, check out the forums at bogleheads.org, particularly the "getting started" pages.

Step two, read "All About Asset Allocation" by Ferri. Or at least the first 5 or 6 chapters.

Before you use any financial firm at all for anything, you should be maxing out your TSP. If you have funds beyond that to save and invest, consider going to a fee-based advisor (not one on commission) and opening an account at Vanguard, Schwab, or Fidelity. Use low cost, passive funds based on the asset class allocation you came up with based on steps 1 and 2.


I use NFCU and USAA for banking and insurance, but use TSP and Schwab for saving and investments.

 

[colbgw02]

TSP is decent, especially in light of its low expense ratio, but I get the sense that it wouldn't do that well if it had to compete for investors. Unless you're close to retirement and largely getting away from stocks, it's too closely tied to the S&P for my tastes. Still, most service members won't have much in the way of other retirement account options, particularly if an IRA is no longer available, so maxing out TSP is important.

For a military physician with any sort of moonlighting (1099-misc) income, you can probably get better returns with an exclusive(k). It also has the benefit of allowing business contributions (20% of net profit), which confers an additional tax benefit considering that it's all the same pot of money for a home business. If you want to max out TSP, you can get the same effect from a SEP IRA, but - again - only if you have 1099-misc income.

If applicable, don't forget about the backdoor IRA, which I would argue should be the first priority after tax-sheltered contributions are maximized.

 

[pgg]

TSP is decent, especially in light of its low expense ratio, but I get the sense that it wouldn't do that well if it had to compete for investors.

I'm not sure that's really a knock on TSP ... the majority of investors are, how should I put it politely, uninformed people who try to time the market, pay high expenses chasing better-than-market returns from mutual funds that overwhelmingly underperform the market, etc. Market returns are there for the taking if people are just content to take them. It'd be no surprise if the boring, rock bottom expense, market returns of TSP didn't get a large market share if it was open to anyone. Look at the dreck that gets advertised on TV and in money magazines. Someone's gambling with that ... there's an entire financial industry dedicated to extracting wealth from commoners who think they can beat the market.

IMO access to TSP is an amazing benefit that every active duty person should take advantage of.

My (small) criticism of TSP is that you can only contribute direct from pay, and its asset classes are somewhat limited. I'd like to have REITs and better international options than the I fund (which excludes much of the non-US equity market, and has no emerging market holdings). There are some needs that can't be met with it.

My only other military specific comment is that when deployed, one really MUST make every effort to max out the Roth TSP while deployed. Tax free going in, growing, and coming out. There's nothing like it but I bet 90%+ of deployed servicemembers don't put even $1 in it.

 

[colbgw02]

I'm not sure that's really a knock on TSP ... the majority of investors are, how should I put it politely, uninformed people who try to time the market, pay high expenses chasing better-than-market returns from mutual funds that overwhelmingly underperform the market, etc. Market returns are there for the taking if people are just content to take them. It'd be no surprise if the boring, rock bottom expense, market returns of TSP didn't get a large market share if it was open to anyone. Look at the dreck that gets advertised on TV and in money magazines. Someone's gambling with that ... there's an entire financial industry dedicated to extracting wealth from commoners who think they can beat the market.

I wasn't really thinking of TSP investors vs. the field. More like TSP investors vs. other people looking for a 401(k) or equivalent account. As compared to day traders and accounts pushed by snake oil salesmen, TSP is metaphorical gold.

IMO access to TSP is an amazing benefit that every active duty person should take advantage of.

TSP is an amazing benefit for Private Snuffy, who might otherwise go his entire life without a job that offers access to this type of benefit. For most military physicians, we would otherwise be in jobs that this benefit is a given, probably with some sort of matching. Even my GS physician spouse gets some of her TSP matched. Don't get me wrong, it's better to have TSP than not to have it, but I'm hesitant to give them credit for something I consider to be basic - kind of like getting our bonuses on time.

 

[rib50]

How are the TSP funds( C,S, & I ) doing compared to the mutual funds in the private sector in terms of performance? In my understanding, all of the TSP funds except the G fund are high risk funds. And this because the funds are fully invested without taking the stock market index into consideration.

 

[rib50]

Also, what fund allocation do you recommend in TSP funds? What do you think this plan - - 60% C fund, 20% S fund, and 20% I fund ?

Thank you

 

[Ziehl-Neelsen]

How are the TSP funds( C,S, & I ) doing compared to the mutual funds in the private sector in terms of performance? In my understanding, all of the TSP funds except the G fund are high risk funds. And this because the funds are fully invested without taking the stock market index into consideration.

You should do a bit more reading on the basics of investing. The recommendations above are good, but I always tell people just starting out to read A Random Walk Down Wall Street by Burton Malkiel.

The C, S, and I funds are all index funds which means they will perform virtually identically to private sector index funds that are predicated on the same index. As alluded to above, the TSP's major selling point is that it's fees are lower than any other index fund's (including Vanguard). If by "private sector" you are referring to actively managed funds you really need to understand the difference between an index fund and an actively managed fund.

The G fund guarantees no loss of principle and minimal interest on that principle as it is invested solely in a special class of government bonds--it does not guarantee that your gains will outpace inflation. The other funds have the inherent risk of equities and bonds, but they are not necessarily "high risk".

Your last comment doesn't make sense.

Also, what fund allocation do you recommend in TSP funds? What do you think this plan - - 60% C fund, 20% S fund, and 20% I fund ?

Thank you

I would recommend that you leave all money in the G fund until you have a better understanding of equities. As alluded to above there are numerous factors involved in setting up your TSP allocation including age, risk tolerance, asset class diversification, number and type of investments, etc. If you have no interest in learning about investing you should seriously consider using a finacial advisor (USAA offers financial adviasement, but I have no idea of its quality or cost).

 

[seebelcherrun]

MIldly unrleated but I know that many people advise to get disability insurance as a civilian resident. Is this a good idea as an intern in a civilian program with HPSP obligations to follow? Thanks.

 

[colbgw02]

If available, then definitely get disability insurance as a civilian intern. Ideally, it should be a personal policy that can never be canceled as long as you continue to pay the premiums. Most people on active duty, and possibly those with any military commitment, find getting good disability insurance hard to do, as many companies won't insure someone in the military. Obviously, the military offers its own form of disability insurance, but for a physician with high earning potential, this falls woefully short.

 

[d2305]

USAA has index mutual funds which are all the same. Expense fees should be in line with the norm. Read Beating the Street by Peter Lynch. The best stock picker ever.

 

[pgg]

Four of the TSP funds are index funds. C, S, and I are equity index funds that closely match the indices they follow. F is a bond index fund. G is special, kind of an ultra-short duration bond fund, but without risk of principle loss.

Also, what fund allocation do you recommend in TSP funds? What do you think this plan - - 60% C fund, 20% S fund, and 20% I fund ?

100% equities is almost never a good choice for anyone.

Where did you get those numbers?

A 4:1 ratio of C:S roughly approximates the total US market, so your plan would be like putting 80% of your money in US stocks (slightly weighted to large cap) and 20% in foreign stocks. That is a risky, volatile choice. I won't state unequivocally that it's wrong because I don't know you. But it's probably wrong.


Your asset allocation should be based on your investment horizon, risk tolerance, and how much risk you need to take to meet your goals.

Start by reading Ferri's book and the bogleheads.org "getting started" page.

Then ask your questions on the bogleheads forum, because asking a bunch of doctors on this forum for advice on managing money is about as good an idea as asking that forum for advice on managing asthma.

 

[DeadCactus]

I have USAA for banking. I used Vanguard for my fund based retirement investing because USAA charges some heavy fees. I use Options House for my gambling "investments" and more intermediate term savings because they were the cheapest in terms of cost per trade and I got a Kindle Fire out of it.

Some good recommendations for reading in the thread already but I still think "The Intelligent Investor" by Bejamin Graham is the best place to start. It builds a firm foundation.

 

[TheTruckGuy]

ETFs vs actively managed mutal funds, I'd go with the ETF - lower fees, and surprisingly more likely to beat the mutual fund (http://www.npr.org/2013/06/05/188306471/resisting-the-temptation-to-win-when-investing)

My personal opinion is that with a little research in finding good ETFs that match the amount of risk you're willing to take, Roth IRA is better than TSP for the dividend growth aspect. Even in a down market, your dividends help grow the value of your investment by giving you more stock at a better value, so that when the market rebounds you've got a better cost basis.

But I just started TSP, managed to get a small bit of my active training pay while at ODS to get into the account, so I'm still learning about its benefits. I wish we could contribute our stipend to the account.

 

[nuopsr-2014]

Hello dear members, what TSP Portfolio allocation do you recommend? Thanks

 

[Cooperd0g]

I would recommend you put it in one of the lifecycle funds that approximates your desired retirement age or leave it in the G fund until you read up on Boglheads.org or WhiteCoatInvestor.com to understand more about what you would like to do.

 

[pgg]

Hello dear members, what TSP Portfolio allocation do you recommend? Thanks

You might as well be asking us what color to paint your house. We don't know anything about you. How could we possibly give you sound financial advice, and why would you listen to advice from people who know nothing about you?

If you don't want to read the rest of the thread you just posted in and follow its advice to read the resources listed, just put all your TSP money in the Lifecycle fund that most closely matches your retirement date, max out your contributions, and don't worry about it.

 

[Gastrapathy]

Lol. Can't he just invest in OJ with the Duke brothers?

 

[Apollyon]

Lol. Can't he just invest in OJ with the Duke brothers?

"Buy low, sell high." - uh, thanks Louis. I would NEVER have figured that out!

 

[FPL Capital Management]

Hello everyone,

I was wondering if any one has used USAA or NFCU financial group for investment. I am just planning to start investment- - stock or mutual fund and thinking to use either of these banks or another company such as Vanguard.

Thank you

Use a bank for banking needs. Use discount brokerage platforms, such as Vanguard, Schwab, Fidelity, Scottrade, or TD Ameritrade for you investing needs. Banks are not setup to deliver you brokerage services efficiently and in a cost-effective manner.