Personal Finance (Not Investing) • TSP loans don't seem like that bad of an idea

I've actually come to the same conclusion.

Here are some key assumptions;
1) You rebalance your portfolio regularly
2) You maintain some mix of stocks and G fund in your TSP
3) You take the Fed at its word that it will reduce interest rates, at some level, over the next 5-15 years
4) You plan to use the loan on some meaningful purchase, meaningful defined up to you.

Taking a modest loan is a great idea.

Right now I can take the $10,000 loan and rebalance my portfolio to the desired mix of C fund (S&P500) and the G fund (preferred USG bond rate). Moreover, I can lock in the high G fund rate (~4% or so) for the life of the loan.

So yeah, a ton of upside. In my personal case, I'm thinking of using the $10k for some home improvement projects. Build out a grown-up area so my wife and I have space to enjoy that won't be invaded by the kids (~$4k), and spend ~$6k to better insulate our attic. FWIW - I expect the insulation to generate $500-800/yr in savings, so end result is I expect to come out financially ahead by taking the loan than without

Statistics: Posted by Happydayz — Tue Mar 26, 2024 9:56 pm — Replies 19 — Views 1371

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