IFT question part deux

[Mike vB]

It's Friday, I have 1 hour left until I go home, and I just had a thought...

My situation is this is my first time contributing to TSP and I'm anticipating 10 years until retirement.

So if I'm just now getting started in TSP (5 months since I started) would it make sense (and cents) for me to start buying C since my per-share price is pretty cheap ??

Maybe a 50G/50C split? Saving 1/2 for even lower price-per-share opportunities? (anticipating continued a lower direction)

Maybe more than my 5% until things start to settle and move upward?

Hmmmmm

 

[ATCJeff]

Tough call.

The only problem in DCA'ing into the bottom is we only have 2 IFT's per month. Trying to time your IFT's and get the lowest price of the month will be tough.

 

[Mike vB]

Maybe I'm still not getting the whole IFT thing...

My thought was to go 100%, buy like crazy at these lower levels, leave it in for awhile (5 years+) while it rises - say like up to 14 or so, then start peeling it off back into G as I get closer to my retirement plan.

It's contrary to the "friends don't let friends buy and hold" motto of this board...

 

[Harley69]

Maybe I'm still not getting the whole IFT thing...

My thought was to go 100%, buy like crazy at these lower levels, leave it in for awhile (5 years+) while it rises - say like up to 14 or so, then start peeling it off back into G as I get closer to my retirement plan.

It's contrary to the "friends don't let friends buy and hold" motto of this board...

My personal opinion (and it is only an opinion, not advice) is it makes perfect sense to me to buy shares in C at a lower price. Once you have those shares, they're yours so as they rise in value, your acct balance will go up faster. Check the historical returns on the TSP website. In 2002, C fund had a return of -22.05. In 2003 it went up to +28.54 so you know people who bought low and held on made money. Of course, this is based on the assumption that the stock market will go back up (which historically it has done) and it may take more than 1 year now so it depends on how long you have to sit and wait.

 

[ATCJeff]

My personal opinion (and it is only an opinion, not advice) is it makes perfect sense to me to buy shares in C at a lower price. Once you have those shares, they're yours so as they rise in value, your acct balance will go up faster. Check the historical returns on the TSP website. In 2002, C fund had a return of -22.05. In 2003 it went up to +28.54 so you know people who bought low and held on made money. Of course, this is based on the assumption that the stock market will go back up (which historically it has done) and it may take more than 1 year now so it depends on how long you have to sit and wait.

I'm starting to think we will not see the October 2007 highs until May 2010! Then a summer sell-off.

 

[Mike vB]

so it depends on how long you have to sit and wait

10 years

 

[James48843]

Yes Mike, that plan works. Assuming it will be higher 10 years from now, you'll do fine.

The "Friends don't let Friends" simply means that you make your moves based on what you believe the market is going to do. Those who simply plug in a percentage, and never touch it, don't do as well (in theory) as those who actively make decisions about their own accounts.

You may want to buy now while it's cheap. Then, later, you may think the market is OVERPRICED again, and decide to sit in G for a while, while the market corrects.

Right now we're in the middle of a huge correction, but not unexpected, since we had one heck of a runup before the fall.

What you choose to do is up to you.

Good luck.