30 yrs to go, buy and hold new guy

[Birchtree]

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Sometimes I just can't help myself - you will be getting some advise from a contrarian bull - so take it with a grain of salt.

You present strategy is fine - but it can be fine tuned. Next year you will be allowed to put away $15,000 plus matching. Over 26 years that comes to over $390,000. There will be times when it will be beneficial to abandon the buy and hold approach. My suggestion for today would be more aggressive - think about allocating 75% C fund and 25% I fund. The S fund will continue to grow but you will be overpaying and thus collecting fewer shares. Stick with the quality of the C fund while it is still relatively undervalued - it will eventually become the outperformer in my opinion. Keep your contributions set to match your allocations. When and if you do a transfer leave your contribution allocations unchanged and dollar cost automatically on the downside. When the funds are retreating you will be going against the grain and will be buying more shares as the get cheaper - you will of course be hurting yourself because everytime you buy you contribute to a loss. But over time you may form the conclusion that you (like many others) enjoy pain. When you determine the bottom has finally arrived it will be time to transfer the bulk of your money back into the funds - and ride back to the next top - and dollar cost averaging is still in effect now to the upside. All you have to do is figure out when to transfer - stay tuned.

 

[Guest]

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I concur with Birch. With so much time to contirbute, you will do well. I only have 2 years to retirement and I am still fairly aggresive.

However, I do like the S fund but I have been with it since the start so over the long run I have done fairly well.

Ron

 

[Sr]

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On being aggressive while young.it isso but there is another school of thought andthat relates to compounding magic. The money that compounds the longest gain momentum over the years and over a 40 year period, the money gain by the portfolio over the last 10 years of this period exceeds all the money added for the 1st 30 years!. That being so, one should be careful not to lose money and worry less about making money on the contributions. You are playing the odds of making the money you contributed being there to give you that lift off during the last 10 years to your retirement. Bottom line, better to settle for 6% than 8% return even while you are young if that will prevent losing money.

 

[Birchtree]

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Sr,

Giving up gains is usually a temporary phenomena in the midst of a bull market- Ron made $20K in a quarter, that could be $80K in a year. There is no compounding that can touch that type of gain. And the only way to achieve those healthy gains is to have enough power (money) in the account to make it work. I've been sitting in the wall flower C fund and have currently made $.68 which equates to a little over $20K for me also. I dearly plan to make a great deal more before I'm done riding on this train. No compounding for me - give me silver and more silver. Surprisingly there are probably multitudes of participants in TSP with the same level of power at their beck and call if they choose to get with the program. Going forward it will take even less timeto to accumulate $400,000 and the opportunity is there for much more with good investment strategies. This site will allow both young and salty dogs to learn and earn. What an opportunity with this bull market starting to kick up some dust- have some fear, but just ignore the gut momentarily and get invested. You have to be in to WIN. That does not mean whip inflation now - inflation is tamed.

Dennis

 

[Dave M]

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My latest brain-storm:the single most important variable under our control is the raw number of shares we posess at the time we cash out. Whatever the share price is, it will be multipied by the number of shares.

The easy way to accumulate shares is through steady purchase over time. If we maximize our contributions weacquire the most shares. On this basis we wouldnever sell, only ever buy and hold.

Dave

 

[Birchtree]

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DaveM,

You are correct in your assumptions of accumulating shares over time - that's the beauty of dollar cost averaging. The problems develope when you have gained enough shares that they will hurt you when the market decides to go into another bear phase - I'm talking in the neighborhood of 20000 - 40000 shares. When one eventually gets to this power level it becomes prudent to try and side step any indepth bear markets. That is going to be my dilemma when we start getting close to another top - could be three years away. But I plan to be constantly vigilant for any signals that we are heading for more than a normal market correction. Taking money out on the upside is very difficult - you still have reserve - I will at some point start to rebuild mine - again may be three years from now - long term strategy.