Late to the game... trying to figure it out

[wetradio]

Hello,

I am 52 years old and have about 18k in my TSP account with an approx $3k general loan out against it. All the money is and always has been in a "G" fund. I am not making current contributions because my wife lost her job so I stopped contributing in order to have more cash flow. I know it is extremely foolish to leave free money on the table, but I was and have continued to be in a bind. As soon as I am able I will start the contributions again. In the meantime... I want to make sure I am doing what I can to manage the account appropriately. The "G" fund seems ultra-conservative esp given my age and the small amount I have in the account. The "L" funds look like mutual funds which would seem to make more sense as they have greater returns and are diversified. I have about 13-15 years of work left (I hope no more than that) so I need to do what I can since I'm starting so late with so little. Thank you in advance for any advice/observations you are willing to provide.

 

[pmaloney]

Not too much information to go on but you need to increase your savings in order to retire. I recently read that you should have at least 6 times your annual salary saved before retiring. You really need to contribute and get that matching money if you can. Also don't retire until you can claim at least your full retirement age for Social Security benefits at around 66 or 67 years old.

Good luck!

 

[Scout333]

Welcome aboard WetRadio! PO is right on target. You really need to get more contributions in your TSP! Especially at your age. Not such a "where to invest the money you already have issue" but more about how to get more in the account. Know it is tough to solve but an extra part-time job, etc. may be worth the effort. Christmas is coming lots of retail jobs available? JMHO

 

[Dinicti]

Dear Wetradio,

I hope your position allows you to have a pension and SS coming to you. If so, you're at a better starting point than many (but should never get relaxed). Regarding your TSP account perhaps you should switch to L cycle funds? Also, challenges aside to your circumstance, I would do everything possible to get all of the matching. Easy money is hard to come-by and that is as easy as it gets. I would get a second job, knit socks, anything than willingly let free money be missed. Good luck, and very good of you to be supportive of your wife.

 

[nnuut]

Welcome to the Forum Wetradio happy to have you here. I'm sure you will meet many people in the same situation as you are. Stick around and TALK!
Best of luck with your TSP!!
Norman

 

[law87]

Welcome to the forum. If I were you, I would be aggressive as much as possible, its basically a gamble due to the amount of cash in your account and time you have left. 50% S fund, 25% C fund and 25% I fund. Save as much as possible, there is a lot of catch up to do especially if this is your only nest egg.

I would not do L fund, this is basically an "all-in" situation for you. Hate to break it to ya but you know your situation better than any of us here.

you could sign up for a premium account, but with 18k I would just go aggressive and hope for the best.

 

[Skorcher]

Wetradio you cannot afford to bypass the full matching on your TSP. Let's say your annual wage is $50K. You think your 5% contribution is costing you $2500. But after taxes (fed + state rate of 30%) the net cost to you is only $1,750 or $67 per paycheck. The government then matches your $2500 with another $2000 (I disregard the automatic 1%). That is a 114% return on the $1750 you're out of pocket on. You cannot find a risk free investment with a 114% return. Jump on it!

 

[tsptalk]

Welcome wetradio! Thanks for joining in.

Taking the unconventional route, if you consider the rule of 72, you would need about a 15% return annually to double your money every 5 years. The best way to do that is to try to time the market, particularly if the market is not cooperating. This year the S&P 500 is down and here we are in October.

Not to make this a commercial for the Premium Services, but Intrepid Timer's service is an example of how you can time the market to get returns that the buy and holder will not get. Intrepid is up nearly 20% this year (mid-Oct.) while the best performing TSP fund is up 2.3%. How, you may ask, can that be done? Market timing.

It's not easy and it could back-fire on you, but that's the only way to outperform the market, assuming the market will not give you the returns you may need to increase your balance sufficiently.

Good luck!

 

[Stoplight]

Welcome wetradio! Thanks for joining in.

Taking the unconventional route, if you consider the rule of 72, you would need about a 15% return annually to double your money every 5 years. The best way to do that is to try to time the market, particularly if the market is not cooperating. This year the S&P 500 is down and here we are in October.

Not to make this a commercial for the Premium Services, but Intrepid Timer's service is an example of how you can time the market to get returns that the buy and holder will not get. Intrepid is up nearly 20% this year (mid-Oct.) while the best performing TSP fund is up 2.3%. How, you may ask, can that be done? Market timing.

It's not easy and it could back-fire on you, but that's the only way to outperform the market, assuming the market will not give you the returns you may need to increase your balance sufficiently.

Good luck!

Geez, Tom !!! You ARE taking the "unconventional route" !

The OP needs to do whatever it takes to get that Government match...I'm with Skorcher on this one...the ROI is WAY above anything the premium services can give him/her ! Get that, and you can mess around with how you invest your balance later !

I love my premium subscription service, but address the basics first !!!

Stoplight...

 

[Dinicti]

Welcome wetradio! Thanks for joining in.

Taking the unconventional route, if you consider the rule of 72, you would need about a 15% return annually to double your money every 5 years. The best way to do that is to try to time the market, particularly if the market is not cooperating. This year the S&P 500 is down and here we are in October.

Not to make this a commercial for the Premium Services, but Intrepid Timer's service is an example of how you can time the market to get returns that the buy and holder will not get. Intrepid is up nearly 20% this year (mid-Oct.) while the best performing TSP fund is up 2.3%. How, you may ask, can that be done? Market timing.

It's not easy and it could back-fire on you, but that's the only way to outperform the market, assuming the market will not give you the returns you may need to increase your balance sufficiently.

Good luck!

Shameless promotion with minimal disclosure.

 

[Intrepid_Timer]

Personally, and I might be a little biased, I'd forego a Starbucks coffee once week and join a quality premium service at $20 a month if I couldn't put at least $800 per month into my TSP. The reason I say this is because even if the premium service only makes you a conservative 10% per year, that's $1800 for the year based on a balance of $18000. Subtract the $240 for the premium service, that's $1560 profit. The following year, it would be more. I don't know what your income is, but you have to get 100% match on an $800 contribution in order to beat what the premium service could make you. Like you said, if you are short on cash and can't afford to put much into your TSP, seems to me 20 bucks a month is "likely" doable. Of course, there are some who think $20 per month is too much to pay, but I guess it comes down to what one thinks "too much" is. I believe the majority of TSPers have over $100000 in their accounts, so 10% would be $10000, yet some are still bothered having to pay $240 for a year of quality investment information.

 

[Stoplight]

Yeah, I-T...I love ya !!! But the OP is leaving money on the table...he needs to resolve his finances to square things away, if that means putting that Starbucks coffee towards his TSP match, NOT a premium service !!!

Just sayin...


Stoplight...

 

[WorkFE]

WR,

Other than your age, TSP balance, an outstanding loan and your spouse not working I don't believe there is enough meat to chew on to provide significant input.
1. How long have you been contributing to TSP?
2. How long have you been a Gov employee?
3. Is your wife planning on going back to work or are there underlying reason she is not working?
4. The good news is the G fund is stable, the bad news is it don't earn much. what is your risk appetite?

Given your 13-15 years time line a bit of aggressive investing is warranted.
Good luck.

 

[Intrepid_Timer]

Yeah, I-T...I love ya !!! But the OP is leaving money on the table...he needs to resolve his finances to square things away, if that means putting that Starbucks coffee towards his TSP match, NOT a premium service !!!

Just sayin...


Stoplight...

So put $20 a month in his TSP so the gov can match $20 and make 2-3% on his balance sitting in the G fund? Or put his balance in a L fund and watch the markets possibly lose 30-40% next year, like I think could happen? To each there own I guess.

BTW, I agree he needs to square his finances, but that takes time, which he doesn't have a lot of...............

 

[cully]

I've just joined TSP talk as well. Take a look at the book Your Money or Your Life - best twelve bucks you could spend! But getting the TSP matching has just got to happen.

 

[DreamboatAnnie]

Hi Wetradio,
You might consider the following options, but recognize there are many options.

How you manage your account depends mostly on how much time you will REALISTICALLY spend managing it and how much you are willing to RISK.

BUY AND HOLD
The pro about a "Buy and hold" strategy is that you do not do anything. None of your time is required. You just put funds/allocations into stocks and put your blinders on for 10-20-30 years. The account will rise and fall with the market and if invested in US stocks you will likely get a return of about 7% for each year it was in there. Right now we appear to be in a downtrend so right now would likely not be the time to start a buy and hold strategy.

Entry: You may consider waiting until the Charts show that the stock index fund (S and/or C) has the 20 "WEEK" Exponential moving average (blue line) crossing back up above the 50 day WEEKLY EMA (red line). You would need to watch the chart every few weeks, or at least once a month to select your entry point. Then just leave it alone and never ever do anything to it except to move in and out based on that one indicator. Historically, a buy and hold in U.S. Stocks outperforms G fund by a long shot. Go to TSP.gov and look at the historical returns by fund and year. No one young should ever seriously consider just leaving their money in the G fund. That will not provide what is needed for retirement!!

LONGER TERM STRATEGY THAN BUY AND HOLD -
--I LIKE THIS ONE, IF YOU DO NOT WANT TO PERFORM DAILY MANAGEMENT AND ARE NOT WILLING TO LEARN ENOUGH TO GAIN EXPERTISE TO MANAGE IT, OR DO NOT WANT TO PAY FOR A PREMIUM SERVICE.
If you can spend a little time (15 minutes) each week without fail and you execute when needed, you could use a longer-term approach that is like a buy and hold strategy but does use some market timing. Basically it is what I said below for your entry. Use the 20 WEEK EMA and 50 WEEK EMA AND GO IN AND OUT OF MARKET BASED ONLY ON THOSE CROSS OVERS. Get out as soon as 20 crosses below 50 Week EMA and get back in when the 20 goes back up above the 50 Week EMA.
Pro: Little time required, but better than a buy and hold and will keep you out of any large down trends Con: You still will lose money when you exit due to the cross over but not nearly as much as a buy and hold. This is a really nice method if you have limited expertise and can be extremely good about not failing to review the chart at least once a week and executing.

PREMIUM SERVICE
Good to use if you find one that you like, trust and that performs well. I do not think that most of the fees for a premium service are too much if you stick to their advice and execute that advice very timely. You must be on top of this.

SAVINGS
You definitely need to save more money. But you must really want to do it. Gotta sacrifice. I would make sure that every year in January when we get the small Cost of Living Increase (1-3%), instead of letting it hit your payroll check, increase your allocation percentage by the COLA increase percentage. That way you never get the increase in your paycheck and you never feel the loss. Keep doing that until you max out your allocation contribution--WITHOUT FAIL! Within a few years, you could at least be maxed out on your contributions. However, if you can increase it now... do it. Also, no more TSP loans.

Just my thoughts so please do not be offended. Many people are in a position where they really need to tell everyone in their Life ---No money! Set up a very tight budget and say no to everything and everyone--unless it is a serious health matter. No cell phones and get basic cable and internet, etc. Limit meals out. Take lunches to work, etc. Buy generic everything. Shop at Ross Dress for Less or thrift stores. No more hair ($90-150) or nail salons ($50-75) or massages ($50-100). Hair dye is $8 at pharmacy. oh... and no more fancy Craftsman tools, or other "manly" toys unless you make money with em!

Okay.. I rest my case.
Best wishes to you and everyone in their investments!!!!!!! :smile:

C FUND (SPX INDEX) - 10 YEAR CHART WITH 10,20,50 WEEK EMA'S..

S&P 500 Index, SPX Advanced Chart - (SNC) SPX, S&P 500 Index Stock Price - BigCharts.com

C FUND -SPX CHART - SHOWING 2 YEARS OF WEEKLY RESULTS SO YOU CAN SEE CROSS OVERS BETTER
S&P 500 Index, SPX Advanced Chart - (SNC) SPX, S&P 500 Index Stock Price - BigCharts.com

Note: AT LEFT OF SCREEN YOU CAN ADJUST TO SHOW THE LENGTH OF PERIOD YOU WANT. Can also enter $DWCPF (instead of $spx) to show you the S fund. Or enter EFA to see I fund. Or enter AGG to see F fund. Warning: Make sure you enter that 3 letter fund just above where it says "DRAW CHART" and click draw chart to see the changes you made. If you enter letters up higher in the page heading next to where it says "Basic Chart", it will mess up the chart.

 

[burrocrat]

I've just joined TSP talk as well. Take a look at the book Your Money or Your Life - best twelve bucks you could spend! But getting the TSP matching has just got to happen.

also read the book 'the richest man in babylon'. pay yourself first. 10%. lucky for us feds, the gov is willing to foot half the bill.

 

[DreamboatAnnie]

oh yes... Must contribute at least 5% to get that FREE money from the matching, but you already know that. Sorry to hear that your wife lost her job. Times are very tough. Need to be sure she gets employed ASAP if she is healthy enough to do that. If not, then harder cuts may be needed to the point of downgrading cars, house, etc. And if really bad and have credit card debt, must consider Chapter 7 bankruptcy to get all debts forgiven. Just depends on what the situation is. Are you CSRS or FERS? Do you have military retirement? In any case, I sincerely wish you the best! Take care, DBAnnie :smile:

 

[wetradio]

Thank you all for your time and advice. I apologize for not responding sooner. I selected the email notification for replies, but didn't receive any so I didn't think people were responding. I will be more diligent at checking back going forward. I'm embarrassed to say that the tech talk is greek to me. I should no more by this stage of the game, but I guess I have just been in avoidance mode most of my working life as debt has always been high and money tight so I didn't give investing much thought. I know I have to capture the matching money. You are all correct... I really need to do whatever I need to to make that happen. I pay into SS so I will have that as well. I have worked for the VA for eight years. Besides capturing the match, my other main question is what fund to have my money in? As I indicated it has been sitting in the "G" fund the entire time and, while pretty safe, the growth is pretty low. Maybe low/slow growth is better than volatility and potential big loss, but is there a good middle ground? Thank you all for your time and counsel.

 

[Boghie]

WetRadio,

You are in trouble. Sorry to say it, but time can help out here so why sugar coat it. This is what I would do in the order I would do it.

1. Immediately move your G Fund assets to either the L2030 or L2040. Bean counters have determined that the L2030 is the right fund for you, but I personally think the L Funds are a fund too conservative. Thus, I suggest the L2040. I would NOT recommend timing this move. Get your existing assets working NOW. Who really cares if you temporarily lose 50% of $20K - we are only talking about $10K at this point if we go through another 2008.
2. Immediately place ALL new contributions into C/S/I. I personally use a 40%/30%/30% split. Why buy into a fund that pays just a bit more than bank interest - that is, the G Fund. And, the F Fund is correcting. In all actuality you MUST increase your contributions and you WANT the equity (C/S/I) market to crater while you buy those funds. I know that sounds weird, but if you get your contributions up than you will be buying assets that will increase that much more and that much more rapidly than if they do not correct. You will be happy and many here will be sad, but...
3. The wife MUST work if she is not severely disabled. She must bring in some income. Use that income to pay off debt. Similarly, if you are getting large Federal or State tax refunds than reconfigure your withholdings. I know people who got a $5K refund and declared bankruptcy because their monthly cash flow was insufficient. Real dumb...
4. Immediately increase your contributions to 5%. Then increase it as soon as possible to 10% and up. Right now you have - in effect - no retirement savings. At 52 years of age you can contribute something like $24K into your 401(k) (that is what TSP is). I know that is way too much of a stretch, but it is a goal and it tells you where you are at.
5. Immediately - before you increase contributions to 10% - get out of credit card debt. I think you should look into Dave Ramsey's books and maybe his training. With your retirement future you can have NO debt hanging over you. No credit card debt, no car loan, and no house payment. Your current TSP assets held in the 'G Fund' will only give you about $1200/year so it is really nothing. Get out of that TSP loan ASAP as well.

Your biggest problem - and the reason why folks here have mentioned that you have to get your contributions up - is that even if you move your $20K to the L2040 your TSP retirement nest egg will only be about $63K if you do not contribute any more. Thus, your TSP will 'safely' provide something like $200/month. You have to contribute more and you have to do it now for time to be on your side. If you get total annual contributions to $10K (this includes the match so it is not all coming out of your paycheck and remember that if your part is $5K than the effect it will have on your paycheck will be $150/pay period) than you can pull more than $1,000 per month without too much risk to your nest egg.

After you do these basics than I would start looking at the Premium Services. You can see that I don't use them but I probably should based on recent returns. But, then I will be kicked off of Burrocrat's Ark...