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Reply to "If you took money out of your TSP for a downpayment on a house...."
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[quote=Anonymous][quote=Anonymous]Let's say you took 50k out for a down payment at 30. 50k compounded at 7% until age 65 is [b]$533,829[/b]. That's the real cost of a 401k loan. [/quote] I think this is a simplistic way of looking at it. If you take out a TSP loan, you have to begin to repay it immediately and with interest. So, you aren't losing $533,829 because that 50k isn't out of the market permanently. It isn't even out of the market in totality for whatever the repayment period is because you begin to pay it back immediately. Sure, you do lose some of the compounding interest benefits. You'd have to weigh this with the money you'd pay in monthly mortgage, PMI etc and see if that is worth it to you or not. And, as some mentioned, they simply withdrew the money that was already in the G fund, which definitely doesn't earn 7% compounded interest. [/quote]
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