Marine in need of advice on TSP investment... PLEASE HELP!

Sort by newest Sort by date
Well I hope Dave Ramsey is right. My wife is currently holding 27,000 shares of an SPX index fund in her defined contribution plan and we ain't movin any time soon.
 
Boghie....wow, it sounds like you really know what you are talking about....I am 40 years old, by the way. I guess you are pretty accurate on what you stated...about 20% is in C/S/I, and the rest in G and F. I did not know I could do IFT until I got on this website! I know that sounds pathetic, but better late than never, I guess. :) So, I will think about what you said....do an IFT to the L2040 or at least a significant amount to C/S/I. In 2040 I would be 68 years old. I would like to be a millionaire at some point before then so I can live like a fat cat when I am that age. I wish I could talk to some of you guys in person!
 
Boghie said:
PuckZilla,

The best benefit of your pension is that you will start receiving it upon retiring from the military. As Frixxxxx stated, retiring early (like 40 years old) is next to impossible via a 401(k) style package. However, the financial benefit of a well funded 401(k) retirement will dwarf the $2,000 pension. Your pension will be play money.

However, to get there you have to take a reasonable amount of risk. And, I cannot determine your sleepy time risk aversion. I would probably talk to a real financial adviser, but maybe I'll play one on this thread.
  • You are somewhere around 36 years old - thus, you have at least 24 years till you can pull money from your TSP 401(k)
  • You are investing 875/month, thus about $10,500/year
  • You have about $45,500 in TSP assets
  • You lost 1.3% of your assets in the 5.5% 'correction' we just went through after the election.
  • This tells me you only have about 20% of your assets in the equities funds (C/S/I) - something probable based on the contribution/allocation question.
Unless you are market timing - which takes tons of experience and skill - or you are extremely risk adverse - which may be true - this allocation is extremely conservative. My guess is that your average annual return is 3%. At that rate you are basically keeping up with inflation. Your account will be worth about $700,000 at age 65 and provide you with about $13K till age 85 (we will use that age simply because Quicken defaults to it as age of death). This allocation is almost a savings account.

I would strongly recommend almost the opposite allocation. Have 20% - 40% in G/F and the rest in C/S/I. You can slide to the smaller allocation in G/F because of both your age and the fact that you will have a solid pension. A 20% G,F / 80% C,S,I mix will result in an annual return of about 8%. Your account will be worth about $1.5 Million at age 65 and provide you with about $48K till age 85. All numbers are inflation adjusted.

In my opinion I would use an IFT to get into the L2040 or move to an allocation with about 20% in the G/F. Had you done so in October 2007 - at the top of the market and thus the worst time to be in equities - and kept investing 22% your account would be higher than it is right now. Probably significantly. I know that sounds weird, but think of all the cheap shares of C/S/I you would have bought and added to your share balance and you can see why. As long as you don't get scared and sell at the bottom.

Maybe start using an IFT each month to move 10% more into C/S/I till you meet your sleeping point.

By the way, at your age Dave Ramsey would have you 100% in the 'C Fund' and just leave it at that.
Click to expand...



Boghie...by the way, I do not know what you mean by "sleeping point"??? Also....2 months ago I changed my monthly allocations (Not an IFT because I did not know about that at the time) to be as follows:

G: 10 percent
F: 30 percent
C, S, I: 20 percent each

I did so because I am trying to be more aggressive since I cannot touch this money for 20 years, anyhow.

Also, when you said I would have $700,000, how did you arrive at that figure? I plan to stop investing the $875 per month once I retire in about 4 years. It will be around $100,000 at the time of retirement. Are you saying that would turn into $700,000 over 20 years or I would need to roll it over into an IRA and keep investing?

I hope everyone on here had a Happy Thanksgiving! :)
 
'sleeping point' is a way to describe risk tolerance. it is the amount of money you have in the game where you can't sleep at night watching it disappear during a market dump. it is different for everyone.

for example, birchtree dozes with a smile on his face when the market drops dreaming of all the shares he can buy on sale, sometimes he even giggles in his sleep, i can hear it way out here. others can only avoid the tossing and turning when they are 100% cash (G), it makes them feel good earning 1.5% per year because that way inflation only erodes their purchasing power by twice that.

if you start posting conspiracy theories about how the whole stock market hates you and only you and then go home and kick the dog, you have found your sleeping point.

bohgie is good at the numbers, do a search and you will find all kinds of nuggets of wisdom regarding risk allocations and taxes.

happy investing, just keep plowing in the contributions and go slow until you identify your target.
 
Thank you, Burrocat. Now I understand the "sleeping point". I figure that since I have 20 years before I touch it, I might as well be more aggressive with it. Also, a friend of mine made a good point: If our economy goes to hell, it want really matter...it woudn't be worth squat, anyway, i.e. Zimbabwe.
 
you must have some smart friends. i agree, investing should only be done with the 'extra' money to increase one's comfort level after assuring adequate stores of rice and machetes. you never know. besides, you can't eat paper. well, you can, but it's not very satisfying.
 
puckzilla said:
Thank you, Burrocat. Now I understand the "sleeping point". I figure that since I have 20 years before I touch it, I might as well be more aggressive with it. Also, a friend of mine made a good point: If our economy goes to hell, it want really matter...it woudn't be worth squat, anyway, i.e. Zimbabwe.
Click to expand...

Thanks for the kind words Burrocrat and Puckzilla...

The two extremes I have found on this site for a 'sleeping point' are:
  • BirchTree: He snoozes through everything dreaming of little lambs jumping over ever shrinking berms and getting herded in an organically manicured pasture for later culling. His fingers sleep walk over his keyboard with messages of investing patience - uh, we'll leave it there. He makes about 8% - 9% a year with huge variance.
  • Amoeba: He sees impending doom with every 0.17% downspiral in equities. Every once in a while he will bravely scout the equities funds with about 30% of his assets to just leap backwards onto the soil never mussed with by a tremor or a falling leaf. He makes about 2% - 3% a year without much variance.
It's the variance that some folks deal with and some folks cannot. BT snoozes through 20% corrections. Try to imagine what you will do if your $45K becomes $36K in a month - with the media yammering about the crash of evil capitalism and lynching the local bankster tellers. BT would dreamily look back 5 years and remember that the $36K was something less than $25K (if he made no contributions since then). He would get poked by his wife for snoring, turn to his side and start slumbering again. On the other hand, Amoeba would be hyper worried if his $45K became $44K. If he scurries to the TSP site he notes that his account was $39K five years ago. He lost a years worth of growth when the market collapsed 3%. Obama won, Prop 30 was approved, and there are earthquake faults in Kalefornea and hurricanes in Jersey Shore. Yowser. Get that 20% (in C/S/I) out of equities and back to good solid earth.

The funniest thing is that if Amoeba is 40 years old he is guarantying himself a second Social Security check with his returns. He will not be buying that boat, the backup Winnebago, or a second house on the new Jersey Shore. But, with his pension, his Social Security, and his limited TSP holdings he will be OK. I think that is where Amoeba is, and I'm guessing you have managed your assets like that. Oh contraire the BirchTree. He is already retired and his TSP is a plaything of the rich and famous. Personally, since TSP will be my Winnebago and Boat fund I have to be more careful - especially when I start running out of time for an equities correction to correct back. I will be as skittish as Amoeba when I turn 60 or so.:p

That is how you set your sleeping point. Can you accept a normal 10% - 20% correction without selling your holdings at their low point? If you cannot, then you should have holdings in G/F. I use Quicken and Ric Edelman's 'The Lies About Money' to set three general purpose allocations. Right now I am ultra conservative for me. Not panic conservative (you can see my allocations in the AutoTracker), but more conservative than my documented three normal allocations. I am doing what I know is dumb - I am market timing. That 27% in the 'G Fund' is there as a buffer for the 'Fiscal Cliff', TaxAggeddon, and whatever. I believe I am dumb for trying to time the market - but, I have made 4% over my desired returns this year so I can be dumb. If I am dumb and right than I will bank some serious growth during a correction. If I am dumb and wrong I will earn a paltry 13% - 15%. I'm ok with both. And, if I am dumb and really wrong and sleep through a 20% correction from this point I will have to deal with earning 8%. Ah, the power of allocations.
 
Boghie...wow,thank you! That is a great analogy. I understand perfectly clear...and I am also realizing that I have been looking at this the entirely wrong way over last several years. I am very cynical and I DON'T trust politicians, Capital Hill, etc so I have been waiting for an economic apocalypse for what seems like forever. I have always been afraid of investing and losing this money (I hate Las Vegas, too) ...but like I mentioned, I have been thinking more and more about it and it seems that there isn't much too lose anyhow, so why not go ahead and try to make it work for me while I am still semi-young.

No matter what, my money is locked in to the TSP for the next 20 years....that is enough time for two or three severe corrections, while in the meantime there should be plenty of time to recover and grow. I will have to do an IFT in order to get more aggressive. I am feeling more like Birchtree then Amoeba at this point...I realize that you need to buy low, so when the stock market stumbles, as my friend would say: I will be buying shares "on sale".

I see that C fund has an average rate of return since inception of over 9%, where the I fund only has about 2.8% growth...the others range from 5-7%. G fund started in 1987, F fund in 2001, I believe...or maybe it was S fund. Either way, with 20 years to invest I should definitely get deeply involved in the C fund, but I would prefer to do an IFT when it gets LOWWWWWWWW...not while it is close to the top of its game. Not sure when I do the transfer or how long it takes to post yet...I am still learning. I guess that is what you mean about timing the market, which of course, I know NOTHING about.

I wish I would have been heavier in the C fund all along. The I fund seems kind of like a waste of time to me.

Thanks again for your input!
 
Puckzilla,

Nice read on the info posted on your thread. It is obvious you are into this - and want to know what you are doing. To that end, look around here - and, don't really listen to me. I'm ok on the number crunching - but you will find others that match your investment style and who know far more about the market than I. Also read at least these three books:
There are obviously others, Burton Malkiel, Peter Lynch, Nassim Taleb, and John Bogle have awesome books that are fairly easy reads. And, why not Niall Ferguson's 'Cash Nexus' and 'The Ascent of Money' which are not investing books but are awesome. Plus 'The Forgotten Man' by Amity Shlaes. Maybe I should stop looking at the ole book shelf before I run out of space and time. Maybe Einstein!!! Ah, shut up Boghie. Just shut up. We are all too fat and tired to listen to this:p.

On the whole IFT decision thang...

Why not do what I just did. I moved 15% of my 'G Fund' holdings into upping the amounts in the C/S/I funds. Maybe if the markets still show strength in early December move another 15%. No need to move it all now or to wait for the perfect market timing point. I don't know about you but I do know my market timing instincts really suck. I'm ok reading frothy tops but not good enough reading unsustainable trenches to make money with a full market timing model used by the (Fund) swingers here (the chaps that move to 100% G and then move 100% S and back). By moving smallish - but still enough to affect your growth - amounts you will learn where your sleeping point is. Give it time. You want to find out if a 5% correction in the 'C Fund' (the S&P500) makes you skittish. If it does, maybe back out of the last move in whole or part.

Finally, your IFTs are pure gold when you start making use of them. You only get two of them per month. After using those two you are limited to SqualBears '<1%' IFT moves. That is kindof another problem with the swingers. The '<1%' moves allow you to 'round up' your holdings in any fund you own - every day if you are very excited.
 
Boghie said:
Puckzilla,

Nice read on the info posted on your thread. It is obvious you are into this - and want to know what you are doing. To that end, look around here - and, don't really listen to me. I'm ok on the number crunching - but you will find others that match your investment style and who know far more about the market than I. Also read at least these three books:
There are obviously others, Burton Malkiel, Peter Lynch, Nassim Taleb, and John Bogle have awesome books that are fairly easy reads. And, why not Niall Ferguson's 'Cash Nexus' and 'The Ascent of Money' which are not investing books but are awesome. Plus 'The Forgotten Man' by Amity Shlaes. Maybe I should stop looking at the ole book shelf before I run out of space and time. Maybe Einstein!!! Ah, shut up Boghie. Just shut up. We are all too fat and tired to listen to this:p.

On the whole IFT decision thang...

Why not do what I just did. I moved 15% of my 'G Fund' holdings into upping the amounts in the C/S/I funds. Maybe if the markets still show strength in early December move another 15%. No need to move it all now or to wait for the perfect market timing point. I don't know about you but I do know my market timing instincts really suck. I'm ok reading frothy tops but not good enough reading unsustainable trenches to make money with a full market timing model used by the (Fund) swingers here (the chaps that move to 100% G and then move 100% S and back). By moving smallish - but still enough to affect your growth - amounts you will learn where your sleeping point is. Give it time. You want to find out if a 5% correction in the 'C Fund' (the S&P500) makes you skittish. If it does, maybe back out of the last move in whole or part.

Finally, your IFTs are pure gold when you start making use of them. You only get two of them per month. After using those two you are limited to SqualBears '<1%' IFT moves. That is kindof another problem with the swingers. The '<1%' moves allow you to 'round up' your holdings in any fund you own - every day if you are very excited.
Click to expand...

Thanks for the recommendatons on books and thanks for the IFT advice. I will probably start to move a little as you mentioned and see what happens. Thank you also for the compliment. I appreciate the feedback everyone is giving me on here. To be honest with you, must of the active duty Marines I know that invest in the TSP do so minimally and/or focus on other things such as IRAs.

I suppose if I had gotten into an IRA at a younger age, it would be the same thing...Six in one hand, half a dozen in the other, as they say...

Also, someone else brought up another good point...Since I am simultaneously trying to save for a home, why not put some of the money into mutual fund to keep it more liquid. Given my current pace, I will have approx. $100K in the TSP in 2017 and also about $110-120k in the bank for my home purchase, but no kind of an emergency fund.

It seems my options are to do a partial mortgage and keep some of the money for a rainy day, or starting also saving for the emergency fund in some other type of investment. I think I can take out a loan on the TSP to buy my home, but I don't want to do that.
 
Last edited:
Also, I am on duty, it is late at night, and I am tired, so I am sorry if my writing is hard to comprehend at the moment.
 
puckzilla said:
I have always been afraid of investing and losing this money (I hate Las Vegas, too) ...but like I mentioned, I have been thinking more and more about it and it seems that there isn't much too lose anyhow, so why not go ahead and try to make it work for me while I am still semi-young.
Click to expand...

I would say their is much to lose, like say half of your 45K if your not paying attention. Talk to a couple of guy's fully invested in 2008 and 2001.

Google search some articles on the lost decade in 2010 that discusses the stock market is unchanged since 2001; 26 Jan 01 S&P was at 1355, today (over 11 years later) it's at 1409, what is that a fraction of a percent over a decade. Friend's don't let friend buy and hold. With that said, buy and holders like BirchTree did better then it sounds because they bought shares at 800 in 2002 and shares at 680 in 2009 and those shares are now worth 1400.

More then losing money though your losing time to maximize your wealth. Glad to have you aboard, take some time to learn (maybe a year) and then get aggressive. You won't be right every time you just need to be right more then you are wrong, and you have time to make up for mistakes.

Boghie said:
I don't know about you but I do know my market timing instincts really suck. I'm ok reading frothy tops but not good enough reading unsustainable trenches to make money with a full market timing model used by the (Fund) swingers here (the chaps that move to 100% G and then move 100% S and back).
Click to expand...

Boghie like's to have a mix of funds and has described his rational eloquently, I however am the fund swinger he describes. Most of us fund swinger have some system or analysis, some have found a better one then other. I have found most are willing to share, but primarily only through the PM as a certain pay service like to challenge everyone system when discussed in the member threads. Send me a PM I'd be willing to share.

Anyways, back to my rational to be a fund swinger. If I believe the market is going to go up or my system tells me it is, why would I not want all my money in the market, and vise verse. I look at it like gambling because that is what we are doing. If I am playing Blackjack and the table is hot, do I press my bet or start pocketing chips? I strike while the iron is hot and press. If the table is cold, do I decrease my bet to the table minimum and keep betting because it is bound to turn around, or do I walk over to the bar and have a beer and wait for it to turn around? I'll see you at the bar.

puckzilla said:
I will probably start to move a little as you mentioned and see what happens.

Also, someone else brought up another good point...Since I am simultaneously trying to save for a home, why not put some of the money into mutual fund to keep it more liquid.
Click to expand...

Remember you only get 2 IFTs per month, so if you move a "little" into stocks and then another "little" into stocks later your out of moves for the month and can only go to the G Fund.

If you want to save for a home and plan to go with a TSP mix like Boghie, why not figure your G Fund % and keep your "quote" G Fund out of TSP all together. For example if you want an allocation of 20% G Fund, take 20% of what you would put in TSP and by treasury bond through payroll deduction (it's effectively the G Fund anyway). Then you could cash them out whenever your ready to buy a home with no early withdrawl penalty. If you want something still fairly stable but a little more risky then the G Fund, you could take that G Fund % and buy precious metals (Gold or Silver). Could you imagine buying your home in gold? That would just crack me up as I walked in to settle with the title company.
 
ILoveTDs, an amazing way of putting it:

If you want to save for a home and plan to go with a TSP mix like Boghie, why not figure your G Fund % and keep your "quote" G Fund out of TSP all together. For example if you want an allocation of 20% G Fund, take 20% of what you would put in TSP and by treasury bond through payroll deduction (it's effectively the G Fund anyway). Then you could cash them out whenever your ready to buy a home with no early withdrawl penalty. If you want something still fairly stable but a little more risky then the G Fund, you could take that G Fund % and buy precious metals (Gold or Silver). Could you imagine buying your home in gold? That would just crack me up as I walked in to settle with the title company.
Click to expand...

I kinda disagree with the whole gambling thing because I suck at gambling and am not to bad at investing. It's got to be different:nuts:.
 
I’m 55 and I’ve been with the FER’s / TSP since day one and I move my money around quite a bit, but I can’t imagine moving it around while deployed in the military. I’ve got two boys who are in the TSP... One is an E6 in the other is a GS13 and they both don’t follow Dad moving his TSP money around... They just let it ride in the L2040 fund and they’ve done very well in their TSP accounts, almost better than mine just by letting it ride in the 2040 fund!! :cool::cool:
 
I am going to read into the L2040 Fund as well....Think I need to get a little more versed in what I am doing before I make in sudden big moves, but thank you for the advice!
 
I hate gambling too, Boghie. Absolutely scares me to death! That is why I never really invested in anything except the G Fund for years and years and years. Now I am thinking I need to do something different because although I don't lose money, I am not even keeping up with inflation.

I finally said to myself "If others can make 10-12 percent on their investments, why can't I!?!?!?"

Does anyone have any thoughts on this simple strategy:

Wait until the market takes another big plunge, say the DOW drops from 13000 down to 10000 or whatever, then IFT a majority of my money into the C Fund and wait for it to recover....it sounds risky, but doesn't it ALWAYS recover? I mean, besides, if it doesn't, money will be the least of our worries.....right? or wrong? Remember, I am just a newbie, but it seems to me that nothing ventured is nothing gained, and afterall, it has always bounced back before.....of course, we have this Mayan holiday coming up, so maybe it won't matter after December 21, anyway...hahaha.
 
AND JUST TO CLARIFY: When I say wait to invest after the DOW takes a plunge, I mean invest once it begins the ascension again..not while it is still dropping....:)
 
Ooops...See, I told you I wa a newbie...I guess I should have said wait until the S&P 500 drops, to be more specific, although, I guess they would both take a dive at the same time. ...But my point is that everyone says to "buy low and sell high"...well, as far as the TPS is concerned, since the C Fund mimmicks the S&P 500, even if it drops to a record low as in 2008, as long as you are patient, just wait until you know the market is at it's bottom, then sink your money into and wait for the next upswing...then GET OUT! Right? It sounds safe enough....
 
If you practice that infidelity you'll always be one day late and a dollar short. Practice the discipline of dollar cost averaging all the way down and then all the way back up - that way you don't leave anything on the table. The only one qualified to call a bottom on this board is member amoeba - that's his territory. pun intended.
 
Puckzilla,

Two things.
  1. There might be another 2008 failure in your lifetime. Then again there might not. Who knows, but I don't think it wise to wait for a once in a lifetime event that has already occurred. Even if we get another complete crash how many years of earnings are you forfeiting by not having assets in C/S/I? You should have some assets in C/S/I at all times. I would say at least 50% unless you setting up a market timing move.
  2. You will want to find a fund allocation that has enough of some funds increasing when others are decreasing so that it buffers losses. Helps with the sleep. Trying to buy low and sell high doesn't help with the sleep. Since I am investing in my retirement account I don't want to have 6,205 sleepless nights till I buy my seafaring boat. Right now, reading your discussion, I would probably dump the assets into the L2030 fund and let it sit while I study if I were you. That fund has more in the 'G Fund' than I like, but otherwise the allocation is ok for someone who is a bit risk adverse. Then, if you think the market is going to rage put all of it in the L2040 or L2050. If you are ready to bail out completely, and go all Amoeba on us, then panic into the L2020. With those L(ifecycle) funds it is best to be 100% in them - don't split amongst them. They are all scientific or something.
Once you learn about asset allocation or technical trading (your choice) then you can setup your account via the individual funds (G/F/C/S/I). Till then you are guessing. And, folks like me will eat your lunch, drink your milk, and shake the change out of your pockets:toung:. Not really, just being funny. Long term investing is not a zero-sum game, and in my opinion it is not gambling.

Finally, you are right about the mistake made by long term parking assets in the 'G Fund'. If you are in the growth part of your investment lifetime (and, you are) than sticking your earnings in something like the 'G Fund' IS NOT SAFE. It guarantees and Alpo Meal Deal Retirement. And, I want you to have enough in retirement so I can eat your lunch, drink your milk, and shake the change out of your pockets without is causing you too many problems. Yuk, yuk. Someone has to sell you that second backup Winnebago, eh.:D
 
You must log in or register to reply here.

Similar threads

J
When to withdraw (public safety retiree)
Replies
13
Views
504
nasa1974
nasa1974
J
returning
Replies
1
Views
286
tsptalk
tsptalk
K
Moving funds or change investment mix question
Replies
7
Views
450
tsptalk
tsptalk
J
I'm new here
Replies
4
Views
126
Boghie
Boghie
quabit
Retiring/TSP process questions
Replies
7
Views
526
JD1964
J
Back
Top