The TSP is the government equivalent of a 401(k) or 403(b) retirement plan. How it works is you put a % of your salary in, and the government matches up to a certain %. This money comes out pretax, so you save by not paying taxes on it and the earnings grow tax-free. It is the best retirement deal out there in my opinion; it reduces your current taxes, gives you free money, and grows tax free.
If it were me and my dh, I would max out the contributions to the TSP and not let him open the Ameritrade account to buy penny stocks. First, those will not grow tax free unless you hold them through an IRA. Second, the money you use to buy stocks is coming from after-tax dollars, so no tax savings there. Third, no free matching money from the government. Fourth, you are much safer and more likely to profit investing in indexes (broad cross sections of the market) than individual stocks. Individual stocks are too risky to bet your retirement on IMO unless you already have a broad diversified portfolio and have a little extra money to play around with that you don't mind losing.
You can learn more about the TSP at www.tsp.gov.
The most important thing to do (besides maxing out your contribution, or at least putting in to the point that you get all the free matching money) is figuring out an appropriate asset allocation within the funds offered by the TSP. I.e., what should the distribution be between stocks, bonds, international, etc. You can find good advice on asset allocation at places like www.fool.com.
NEXT TOPIC: IRAs for non-working spouses. I think it's important that stay-at-home parents take full advantage of the IRA contribution limit of $3000 for a spousal IRA. To my mind, that should be a funding priority for any couple with one working spouse and one stay at home parent. The stay at home parent is sacrificing a lot already in terms of lost income and no Social Security credit , and I believe all SAHPs need to have their own savings/assets in their own names.
Comments? Stories? Advice?
I had no clue the military matched your funds . i said i let hubby do what he feels best . I have say in it BUT cause i knew nothing i just said do what you think is best . Meaning he put in 7% of our paycheck in every payday . thats the max you can put in . He has yet to open up the other account cuase we took that money and put it down on a new hous we are going to rent . (this place has to many bugs and has tons of mold so we will be out of here soon) Well i am off to go check out info on the TSP and the other web sites about IRA's. Thank you agian !