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Even Dave Ramsey is Wrong Sometimes

October 30th, 2008 at 05:27 pm

I was half-listening to Dave Ramsey's podcast on ITunes yesterday while getting some work done. My ears perked up when a caller asked whether he should roll-over his TSP into an IRA at Vanguard after separating from Federal Service.

This is my exact situation, and my TSP is the only account I haven't consolidated into my Vanguard Target Retirement Fund.
Dave told the guy to roll it over, since you have more choices at Vanguard, and the choices in the TSP are very limited. I went and did a little research on my own.

Here is a breakdown of TSP(Barclays) vs Vanguard fund fees:

0.15% G Fund -
0.15% F Fund - 0.20 (VBMFX) Total Bond Market Index
0.15% C Fund - 0.15% (VFINX) S&P 500 Index
0.15% S Fund - 0.24% (VEXMX) Extended Market Index
0.15% I Fund - 0.22% (VDMIX) Developed Markets Index
0.15% L2040 - 0.19% (VTIVX) Target retirement 2045

Barclays gets a subsidy for managing the TSP, hence the really low fees. Considering the near identical 5/10 year returns I don't really see the point of switching unless you're 100% in the C fund.

Am I missing something here?

Posted in Investing | 4 Comments »

4 Responses to “Even Dave Ramsey is Wrong Sometimes”

1. merch Says:
   October 30th, 2008 at 06:51 pm 1225392682
   1225392682
   He is correct. You don't have to go into just the funds you mentioned. You could go into 100s of different funds. So technically, there are more choices.
   
   he is also more for managed funds then just index funds. This is were Bogle and Ramsey disagree.

2. MileHighGirl Says:
   October 30th, 2008 at 07:08 pm 1225393722
   1225393722
   Obviously I have more choices, but if the returns are pretty much the same and the fees are way less in the TSP what's the point of transfering?

3. merch Says:
   October 30th, 2008 at 07:31 pm 1225395060
   1225395060
   For you, it might not make sense. But from Ramsey's view, index funds are not what he recommends. He recommends growth and index funds. And other actively managed funds.
   
   If you are just going to roll it into similiar funds, you are right keep it where it is.

4. MileHighGirl Says:
   October 30th, 2008 at 09:19 pm 1225401563
   1225401563
   merch - in your opinion are the actively managed funds worth it? It's been pounded into my head that noone beats the market so indexing is the best if not the only way to go. I guess I could get some ETFs and possibly save some money that way.

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