Newer Newbie Question....

[EhhMon]

...actually long time member/lurker here.

but the changes I see you all make in the Member Allocations are those for that day before the 12:00 EST deadline or are they for the next day?

Like if I were to make changes to 100 S before today's deadline. Is that for today's market or the next day? Because I saw this when I was making Interfund changes:

You have an interfund transfer request pending that should be effective as of close of business 03/26/2007. You may change or cancel this request until 12:00 noon, eastern time that day. (Only one request can be effective each day.)

I'm kind of confuse with the "close of business" part. What is the close of business? Are they talking the 12:00 EST Market deadline or the TSP thingy?

Yeah I know its prolly a dumb question, but still trying to get the gist of things here. A co-worker told me the changes I make today won't really go into effect until the next day. H-E-L-P !!!

 

[EhhMon]

OK, I let my adult ADD get the best of me before reading the rest of the messsageboards.

I guess it "IS" the next day. To bad there isn't a delete feature so I wouldn't embarrass myself like this.

 

[Spaf]

OK, I let my adult ADD get the best of me before reading the rest of the messsageboards.

I guess it "IS" the next day. To bad there isn't a delete feature so I wouldn't embarrass myself like this.

EhhMon,
No embarrassment! We all started with the same question!.....

Welcome, my friend!.....
Spaf

 

[Rod]

OK, I let my adult ADD get the best of me before reading the rest of the messsageboards.

I guess it "IS" the next day. To bad there isn't a delete feature so I wouldn't embarrass myself like this.

No such thing as a dumb question. We are more than happy to answer any questions you may have.

Welcome!

BTW, look at your reason for editing your post.

 

[tsptalk]

I guess it "IS" the next day. To bad there isn't a delete feature so I wouldn't embarrass myself like this.

You're not alone by any means EhhMon. Top 2 questions I receive via email from new readers:

1) When I make a transfer how long does it take to take affect?

2) When you make an interfund transfer, do you also make a contribution allocation change?

Answers: (gives me an excuse to point out the FAQ page)

1) http://www.tsptalk.com/faq.html#6

2) http://www.tsptalk.com/faq.html#5

 

[bob465]

Well I'm glad that there are folks here who don't mind ,, errr ,, less than well informed questions.

I've been blindly following the TSP Allocations for a couple've years and in scanning thru the returns it seems that I may do better following another strategy but WHAT TO DO???

Unfortunately I don't have much time to become as savvy as my engineer's mind would like and usually in that case I swing the other way and depend on good folks like yourselves. I just joined the premium service in hopes of getting a better return but noticed that the survey performance is best so far for 2007 (don't understand how to follow if the ratio isn't to date).

I know that there are many factors to consider but I'm 7 years from my MRA and have a chunk of change in my account. Any suggestions? ...please ....please!

 

[Spaf]

Bob465,
All traders need to be savvy!...Real savvy!
You can learn if you would like? This is a great place!
However, I wouldn't risk loosing any retirement $, as close as you are!
Sit in the appropriate L-fund, at TSP.
When you feel you are comfortable with trading strategies, you might stick a toe in the water.
When you get near retirement capital preservation becomes a more concerning issue.
Regards
Spaf

 

[SkyPilot]

Bob465, another question to ask yourself is if you will need to access your retirement funds right away.

Some will not need the funds for several years after the date they separate from fed employment. Therefore, if you have this advantage, you may have more years until you reach that "need" horizon, thus greater flexibility with your risk tolerance and how aggressive you can be.

 

[VirginiaBob]

Bob465, another question to ask yourself is if you will need to access your retirement funds right away.

Some will not need the funds for several years after the date they separate from fed employment. Therefore, if you have this advantage, you may have more years until you reach that "need" horizon, thus greater flexibility with your risk tolerance and how aggressive you can be.

That's pretty much my plan as well, to tap into my personal savings and Roth IRA contributions (and eventually earnings) when I retire at 57, and don't touch the TSP until everything else is exhausted.

 

[EW_ret]

Most withdrawal strategies recommend taping the Roth IRA last. This allows tax free compounding. The TSP and Tradition IRA accounts must have withdrawals art age 70 1/2. The recommended withdrawal strategy for most is first taxable investments/savings, 401k/Traditional IRAs, and Roth IRAs.

That's pretty much my plan as well, to tap into my personal savings and Roth IRA contributions (and eventually earnings) when I retire at 57, and don't touch the TSP until everything else is exhausted.

I'm retired and don't need to withdraw from my TSP account, or other investments. I could take on more risk in my investments but have not by choice. I found myself getting more conservative as my retirement date approached. Since I do not need the income from investments, I do not need to take on more risk than 40% equities, and 60% bonds/cash.

The danger in taking a trading approach is not following the strategy you lay out for buying and selling. Because we a human we have emotions which bias our daily trading. It’s because of these emotions that many fail to beat the market in the long run. The passive approach of maintaining a fixed allocation among the funds, or an L fund, works because the strategy remains constant, and emotions are removed. Of course, this is just my opinion based upon my own experiences.
You should have an investment strategy, and stick to it, regardless of world events, or interest rates, or what others are doing.

 

[SkyPilot]

EWGuy,

Points well made...

For those contemplating retirement and using a "buy and hold" strategy; watch out for major corrections, e.g., 2000-2003.

Another bear market may arrive when it can hurt the most. For the retiree, a strategy that does not allow for a "safe harbor" scenario may wreak havoc and disaster.

An L fund will not care, but will ride the market all the way down. As the retiree is no longer making contributions, this will not even allow for DCA.

The question will be, can one afford to just "ride it out"? Maybe so... Maybe not.

Good luck and prosperity....

 

[EW_ret]

I agree we should avoid bear markets if at all possible. In hindsight, they are recognized but when they start is difficult to determine. At what point in a market correction should you bail on equities? When should you jump back in the market? These are questions we try to answer.

 

[NyteTracker]

The recommended withdrawal strategy for most is first taxable investments/savings, 401k/Traditional IRAs, and Roth IRAs.

I agree with EWGuy.
Additionally, there is another option that many people overlook.
This option would use a non Roth account for the first 15% tax bracket, then IF the Roth account has a healthy balance and the cost of living does not exceed the 15% limit by too much, tap into the Roth for the 25% tax bracket.
For example, if a couple has an annual cost of living of $80,000/year, use non Roth funds for the first $71,600 and the Roth funds for the additional 25% tax of $8,400, for a savings of $2100.

2006 Married Filing Jointly 10% $0-15,100, 15% $15,101-61,300, 25% $61,301-123,700
http://www.enterprisefunds.com/education/tax/brackets.asp

This applies only to amounts above the standard deduction.
For example, a couple filing jointly would actually pay 0% on the first $10,300, 10% between $10,301 and $25,400, 15% between $25,401 and $71,600, 25% between $71,601 and $134,000, and so on.
http://en.wikipedia.org/wiki/Tax_bracket#Tax_brackets_in_the_US

Basic Standard Deductions, Tax Year 2006
Married Filing Jointly, $10,300
http://en.wikipedia.org/wiki/Standard_deduction#Basic_standard_deduction

 

[VirginiaBob]

Cool idea Nytetracker, and good point EWguy. The only thing is will I be able to withdraw from the TSP at 57 penalty free if I retire at 57? If not, I'll have no choice but to withdraw the Roth contributions only or my personal savings. Although I remember a discussion a while aback about possibly not having the penalty as long as you are officially in retired status.

 

[bob465]

Thanks for the comments everyone ,,, even tho they don't give me anykind've a warm fuzzy. Guess that doesn't exist ,,, of course it doesn't but alas, i'm still in what-to-do land. Savvy is the only answer I guess even tho *that* apparently looks many different ways as far as I can tell ...

Thanks again,
Bob

 

[Show-me]

Thanks for the comments everyone ,,, even tho they don't give me anykind've a warm fuzzy. Guess that doesn't exist ,,, of course it doesn't but alas, i'm still in what-to-do land. Savvy is the only answer I guess even tho *that* apparently looks many different ways as far as I can tell ...

Thanks again,
Bob

Frustrating it is. Most of us will refrain from giving you advice about what to do with you investments. We are not professionals. Based on what little personal information you have posted. You should minimize your risk this close to MRA.

Now that I said that you will not like it if the market goes up 30% this year. It is not about how much you make when you are close to retirement it is about how much you want to risk.

In order to protect yourself and you nest egg. You have to give up the potental to make big gains because you do not want to risk big loses this close to retirement.

Keep your retirement in focus. Like a garden, your retirement plans need constant tending, especially in these all-important five years before retirement. Keep an eye on your investments to make sure they remain balanced. Allowing one investment (like a high-flying tech stock) take too large a role in your portfolio can seriously jeopardize your retirement plans. You'll also want to watch your income flow and savings. Are you making and saving as much as you had planned?

http://www.quicken.com/cms/viewers/article/retirement/27604

3. How you allocate your assets.

Typically, for those who start early, stocks are the answer. Over long periods, a diversified basket of common stocks wildly outperforms bonds, cash, and real estate. The differences are breathtaking.

But, as we've seen lately, there's also a lot of volatility in stocks. As you age, you'll want more of your money in bonds and money market accounts. These have lower returns than stocks, but they also have far lower volatility.

Phil DeMuth recommends that, as a basic portfolio, you have half of your savings in the broadest possible common stock index such as the Vanguard Total Stock Market Index (VTSMX) and half in the Vanguard Total Bond Market Index (VBMFX).

To me, that's a bit conservative if you're young. I would have more in stocks and also a good chunk in international markets. (Phil has written a fine book about supercharging your portfolio that will be out in a few months. It's far beyond his basic portfolio in sophistication and returns, so watch for it.)

Ray has a portfolio that he uses in his "Buckets of Money" strategy that uses stocks, bonds, variable annuities bought with a sharp eye on fees, and real estate, and his returns have been excellent.


http://finance.yahoo.com/expert/article/yourlife/27943