Getting Nervous

[richrob3]

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Hey everyone, hope you all are doing well. I am a little concerned with my TSP. I guess the price of Oil really has me worried about the future. Currently I am contributing 50% to "C" - 25% "I" and 25% "S". As for what I call "old money" which is currently sitting in my account the breakdown is like this: 18.52% (G), 30.71% (C), 25.35%(S) and 25.34% (I). Keep in mind I have about 71/2 years before mandatory retirement. I sure would appreciate any advice as to whether you all think that I'm on the right track or if you all think I should move some of my "old money" to a more conservative fund, I guess you guys refer to it as re-allocating. I am sitting on a little under 200K. Well hope to hear from you all. Take care and God Bless!

rich

:^

 

[robo]

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richrob3,

If you go to http://www.tsp.gov/lifecycle/flash/index2010.htmlthe Lifecycle Fund 2010 will give you an idea of what the invesment experts recommend for someone your age.....But it's really all about your risk tolerance.... It at least gives you a general idea of what your allocation should be for your age.... Since you already have 200k sounds to me like your doing pretty darn good.... Again the 2010 Lifecycle is the recommended allocation for someone your age...... By the looks of your current allocation your a fairly aggressive investor..... Good luck!


If I had 80% of my money in the market right now I would also be getting nervous...This is a very tough time of the year..... Aug/Sept.... But I'm a conservative investor!!!!

 

[Birchtree]

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richrob3,

We are all nervous and with plenty reason - that is called the wall of worry. In my opinion you are in survival mode and probably will need to think about rebalancing to cover you for the next several years. Can you handle temporary losses - if you went through the last bear market you know what I mean. Acknowledging that losses are part of investing is one thing; taking and accepting those losses in the markets is something else entirely. The trick is to survive. Performing that trick requires a strong stomach for being wrong, because we are all going to be wrong more often than we expect. Being wrong comes with the territory of an activity whose outcome depends on an unknown future.

I would recommend that you leave your contribution allocations intact just the way they are now. But I do think you would be better off shifting your present balance in the S fund to the I fund. You have already made your money in the small caps starting in 2000. The longer a portfolio is left unbalanced, the more compromised its asset allocation may become. There are two potentially negative repercussions associated with a compromised allocation; being overexposed to the downside and underexposed to the upside. IMHO staying 50% C and 50% I fund sets you up to outperform going forward - regardless of any temporary losses that may impinge on your progress. Continue buying the S fund every two weeks as a hedge justlike you have been doing.

I think oil is peaking and about to start rolling over in the near future. Providing of course an islamist extremist or militant radical muslim, other wise known as a peter head, doesn't succeed in blowing something up that is oil strategic.

What can I possibly say about the new lifecycle fund 2010 - it will most likely turn your 200K into 202K. We will continue to have pullbacks in the markets - but I believe there will be some strong upside moves that may surprise many - and if you are invested you will participate. I forgot to mention that you should also think about shifting that G fund money to the C fund - it will make you much more profit. This approach seems aggressive and it is - but that is how you will arrive at $400K instead of 202K. Let us know how you sort it all out - good luck.

Dennis- by the way I'm currently deep into 100% C fund - love danger, pun.

 

[robo]

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Birchtree wrote:

This approach seems aggressive and it is - but that is how you will arrive at $400K instead of 202K.

I agree with everything Birchtree said except the 202k......


Birchtree is correct if you want the risk.... 200k at 10% average return for 8 years = $443,635

200k at 7% average return for 8 years= $349,000 A 7% return in a balanced fund is very attainable.



The last 10 years in TSP is listed below... The next 10 years might not be has good, or they could be better......

I used 8 years for the figures below.....

10-Year
Compound
G Fund 5.75 6% = 322,828
F Fund 7.72 8% = 378,00
C Fund 11.99 12% = 519,854

S Fund 11.84 12% =519,854
I Fund 5.456% = 322,828

The above does not include new money.... If you take the risk you can make the big money, but you can also lose the big money it's never easy.......

As Birchtree said good luck.... In the end it's your money, and how much risk are you willing to take!

 

[Guest]

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robo-

 

[Spaf]

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Birchtree wrote:

richrob3,

Acknowledging that losses are part of investing is one thing; taking and accepting those losses in the markets is something else entirely. The trick is to survive. Performing that trick requires a strong stomach for being wrong, because we are all going to be wrong more often than we expect. Being wrong comes with the territory of an activity whose outcome depends on an unknown future.

richrob3, I saved part of Dennis's comment. Because it is very, very true!

I invest and I move funds to what I see is my best advantage. I position trade, I don't swing trade or day trade.

Everyone has a system. There are a lot of strategies. Get your self a strategy. If it works fine. If it doesn't change it.

Listen to others and gleam the good stuff, shuck the bull. Learn and manage your own accounts. There are two major elements in investment trading: Understanding the fundamentals (economy) and understanding the analysis (trends, indicators). A lot of times these elements arenot too clear. Thats what we all face and try and sort through.

I am wrong more often than I am right, but the secret is not to let small losses turn into big losses. It's easy to make up 1% maybe 2%, but after that it's really rough.

Rgds. Spaf

 

[rokid]

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richrob3 wrote:

I sure would appreciate any advice as to whether you all think that I'm on the right track or if you all think I should move some of my "old money" to a more conservative fund, I guess you guys refer to it as re-allocating.

It depends on when you need the money and how much money you need. In other words,if $350K in 7 1/2 years will meet your goal, why take on additional risk?

Historically stocks have done much better than bonds over long periods of time - 10 years or more. However, in the short run, stocks are risky - see 2000-2002. In addition, you might want to review what stocks did relative to bonds in the 1970s. As you undoubtedly remember, the 1970s suffered stagflation as a result of anotheroil shock.

As Robo states, the TSP experts recommend a 50% allocation to bonds. Other experts recommend 40-60% bonds for someone of your age. Note that TSP Tom's "no brainer", 20% each fund, i.e. 40% bonds, allocationis doing quite well this year. Finally, no one recommends 100% bonds because of inflation risk, i.e. you need to stay a head of inflation which has historically averaged a little over 3%.

Whatever you decide to do, you might want to consider setting the same allocation for your new money as you set for your old money. Otherwise, your allocations can quickly get out of balance.

Another point of view for your consideration.
:^

 

[richrob3]

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Thank you all for the advice. Man you guys are a wealth of knowledge! I will be re-thinking my current allocations. By the way I'm 49 yrs old and have to retire at 57. But correct me if I'm wrong but I don't think that I can access my TSP until I'm 59 1/2, correct? If this is true then my money would stay in TSP for roughly another 10 years. Again, I really appreciate all the advice, it is really nice to know that I can always ask questions and get some answers. Take care my friends.

rich

 

[teknobucks]

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richrob3 wrote:

Thank you all for the advice. Man you guys are a wealth of knowledge! I will be re-thinking my current allocations. By the way I'm 49 yrs old and have to retire at 57. But correct me if I'm wrong but I don't think that I can access my TSP until I'm 59 1/2, correct? If this is true then my money would stay in TSP for roughly another 10 years. Again, I really appreciate all the advice, it is really nice to know that I can always ask questions and get some answers. Take care my friends.

rich

depends on your situation.....federal cops, firemen, and air controllers may not have to wait if they purchase an anuity (bad deal if married btw)

why do u have to retire are u a controller??

if so goto....

http://atpayplan.natca.net/

 

[richrob3]

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57 is the mandatory age for the Border Patrol. I heard though that when you retire from the Patrol, you can not access your TSP without a penalty until your 59 1/2. Not sure though.

BP 4 life!

rich

 

[robo]

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Rokid wrote:

TSP Tom's "no brainer", 20% each fund

Tom's no brainer is looking better all the time..... I'm currently beating the 3.3% in my total portfolio.My TSP account is2.75% YTD....... If we get a pullback in Sept/Oct I will go 100% long in stocks.... If not the no brainer could beat my TSP account. There is saftey and comfort in having a diversified portfolio.... Sometimes you beat the market, and sometimes you don't...... In the end it's all about the average return.

 

[ATCMickey]

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Tek,

I've followed your posts and have appreciated your insight. This post got me curious, are you a controller yourself? Sorry if I'm being too nosy, just not many controllers I know with your knowledge background in markets.

Thanks for the response in advance,

ATCMickey

depends on your situation.....federal cops, firemen, and air controllers may not have to wait if they purchase an anuity (bad deal if married btw)

why do u have to retire are u a controller??

if so goto....

http://atpayplan.natca.net/

 

[Quips]

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Rich:

You haven't mentioned whether you own or rent. If you own chances are real estate has done extraordinarily well in SoCal. And you didn't mention if you were or are willing to cash out and downsize to a smaller residence or keep what you have. Or ... hoq long you've been there and how much of a tax hit you couldexpect bycashing out (capital gain) and downsizing (new real estate tax base?).

Also, it depends on lifestyle and living expenses with what is currently yours: Is it paid for? Does it have a mortgage? Can you write off the interest? What is the mortgage rate on it? Etc.

Would you be interested in acquiring a reverse mortgage? That will become more and more of a financial strategy as time goes by. Your location sounds like you can mint $$ with something like that ... if you are comfortable with it.

Most financial advisors do not suggest withdrawing more than 4-5% a year from the 401K. Plus there may be other expenses: health insurance, Medicare, taxes, car expenses.

LOL

 

[teknobucks]

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ATCMickey wrote:

Tek,

I've followed your posts and have appreciated your insight. This post got me curious, are you a controller yourself? Sorry if I'm being too nosy, just not many controllers I know with your knowledge background in markets.

Thanks for the response in advance,

ATCMickey

depends on your situation.....federal cops, firemen, and air controllers may not have to wait if they purchase an anuity (bad deal if married btw)

why do u have to retire are u a controller??

if so goto....

http://atpayplan.natca.net/

mickey
stox have been a hobby...controller since 1975. (ozr / A511 korea in army) (cmh / zla...areas a&b / jax in faa)
where do u vector?

 

[Wheels]

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richrob3 wrote:

57 is the mandatory age for the Border Patrol. I heard though that when you retire from the Patrol, you can not access your TSP without a penalty until your 59 1/2. Not sure though.

I think your situation is the same as us controllers. If you stay until the first day of the year you turn 55, then you can access your TSP without penalty. If you go before the first day of the year you turn 55, then you will need to wait until 59 1/2 (although you would still be able to get your hands on a little bit of it each year using the IRS life expectancy method).

Dave

 

[GatorinGA]

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Don't you get a one time waiver of capitol gains tax on the sell of your house if you are over 55?

 

[smine]

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·
http://biz.yahoo.com/ap/050825/oil_prices.html?.v=12]Oil Prices Retreat After Hitting Record[/url] AP

·
http://biz.yahoo.com/ap/050825/kodak_consolidation.html?.v=3]Kodak Trims Some Operations, 900 Jobs Cut[/url] AP

·
http://biz.yahoo.com/ap/050825/six_flags_sale.html?.v=3]Six Flags Puts Itself Up for Sale[/url] AP

·
http://biz.yahoo.com/ap/050825/earns_hormel_foods.html?.v=3]Hormel Foods Posts Lower Profit, Sales Up[/url] APpossibly another losing day? who can tell....it starts out one way then goes another, waits for us to sell or buy before a deadline then goes south!!

 

[ATCMickey]

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Tek,

Been in Minneapolis and Detroit over the years but now call Denver home (hopefully til retirement). Denver Tower is home today. I thought for a second you might be Waldo until I saw JAX rather than ZJX.

Sorry for sidetracking the thread. Thanks for the response...hopefully we can all get out of this job happy, healthy, andfinancially setenough to do it soon.

Take care,

ATCMickey

 

[Wheels]

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GatorinGA wrote:

Don't you get a one time waiver of capitol gains tax on the sell of your house if you are over 55?

It's not a one time waiver anymore and you don't have to be 55 anymore.

Dave

 

[GatorinGA]

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I thought you could only avoid paying the capitol gains tax was to put all of the money from the sell of your house into your next house. Since this thread was indicating he might be able to cash in on the proceeds from a house in Cali, I assumed the premise was that he'd sell his house for a large amount, then turn around and move to somewhere where the houses are cheaper, and pocket the proceeds. Can you do that without paying taxes? If you dont' put teh proceeds into another house, or use the over 55 exemption, how do you get away with not claiming the profit and paying taxes on it?