PFInterest wrote: ↑
Mon Aug 06, 2018 7:09 am
motorcyclesarecool wrote: ↑
Sun Aug 05, 2018 2:06 pm
I’m pretty sure it’s not a loss leader for Fidelity; they are being more aggressive with securities lending, which FRTIB could do easily.
I was able to get into the zeros on day zero. I’ve rolled all available funds in both our Fido Roth IRAs to the zeros as of Close of Business Friday, in accordance with our AA. This involved selling Premium Class shares and BlackRock commission-free ETFs. My Vanguard Roth IRA is going to sit tight for now.
I used to contribute to a deductible IRA at Vanguard every year and promptly roll it to the TSP for the lower costs and to keep the deck clear for Backdoor Roth. Now I’m thinking I’ll open a Traditional IRA with Fido, invest in Zero funds, and only roll to the TSP if I find myself in a position to Backdoor Roth once more. TSP would lose out on Assets Under Management.
how do you propose that selling something for zero is not a loss leader? do you buy hot dogs from costco?
do you understand that its 80% of an index?
wait what are you doing? by contributing to a tIRA, and not converting it, theres nothing to keep the deck clear of since you cant do a backdoor rIRA (you already used up your 5.5K contribution allowance).
im not sure you have a grasp on the backdoor rIRA.
Aggressive securities lending is how they make their money on the Zeroes. It’s no more a loss leader than no-load mutual funds were when they were first introduced. They make money the same way any bank does, by having your assets under their management, and making loans based on them.
My contention is that FRTIB could make back their costs through securities lending, the same way as Fido does in the Zeroes.
Have you seen the scatter plots for VTI versus VOO? FZROX should fall between the two. I’m just fine with 80% of an index if it’s free.
I don’t do backdoor Roth every year. I only do it in windfall years. In non-windfall years I’ll max out my Traditional contributions to deduct them. Typically, in non-windfall years, I’ve rolled my deductible TIRA to the TSP so that in windfall years, I’ll be able to backdoor Roth without worrying about the pro-rata rule. With ERs going down in the free market and ERs going up within the TSP, I’m no longer incentivized to roll my deductible IRA money in until a windfall takes place. Therefore, in a few short years, TSP will be missing out on tens of thousands of dollars of AUM. Multiply that out by some fraction of active Feds, and you get quite a number they’re missing out on.
When I retire, unless something changes, I’ll be taking a significant fraction of my TSP balance with me (except whatever G-Fund allocation I desire) and putting it into cheaper vehicles. Multiply that out by a substantial fraction of retiree Feds, and FRTIB might be looking at a death spiral if they can’t contain the expenses.
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