PostOakGuy's Account Talk

[PostOakGuy]

I have been a federal employee for almost three years. I am currently 29. I have been investing the maximum allowed (IRS) in the TSP. I have my allocations at 35% C 35% S 30% I. I plan on investing the maximum allowed until retirement. I want to be aggressive with my money, especially while I'm young. I would like for my balance to be over a million at retirement. Considering I am a buy and hold type of guy, is this a good stategy for me or would I be better off doing something else.

 

[Birchtree]

Re: Enough for a million?

IMHO you strategy is fine - but if you want to be aggressive you should consider allocating your contribution to a 100% position to one fund. That way you purchase more shares using your DCA technique - I've been doing it for years both in the C fund and S fund. This past year I purchased more than 1300 shares in the C fund. DCA does make a difference but you simply have to do time in grade. The problem now is that prices are going to get even more expensive and if you are thin and not concentrated it will take even longer to accumulate shares. There is just no way to be in a hurry - this is a retirement oriented program. My goal has been to accumulate 40,000 shares of the C fund - I'm over 34,500 shares currently. Once you get to my level the way to make larger gains is to pistol shoot and time the market. I'll probably be moving seriously in that direction after the second half of 2007. Good luck and thanks for joining.

 

[rokid]

Re: Enough for a million?

IConsidering I am a buy and hold type of guy, is this a good stategy for me or would I be better off doing something else.

As a fellow buy-and-holder, I think your asset allocation is fine for someone who wants to be aggressive with 100% equities. However, make sure you can stand a 73-74 or 2000-2002 bear market. I don't think I can, so I hold bonds to dampen risk/volatility. Of course, I've got you by 30 years.:cheesy:

Some might argue that you should hold the total domestic market - approximately 71% C Fund and 21% I fund. However, if you believe the Fama/French story, it makes sense to "tilt" to small stocks, i.e. S Fund.

International recommendations usually range between 20%-40%. Therefore, you're in the ball park. In addition, check the tally - it has a Total Global Market allocation that has done well this year. It's based on the CAPM idea that the total market is the most efficient portfolio.

Finally, per William Bernstein, it's more important to maintain your asset allocation than trying to determine the exactly perfect one up front.

Welcome to TSPTalk, keep up the contributions, and good luck.

 

[ChemEng]

Re: Enough for a million?

28 years is more than enough to make $1M, especially contributing the maximum (and keep in mind that the maximum will increase yearly now to help you out even more.)

 

[FUTURESTRADER]

Re: Enough for a million?

IMHO you strategy is fine - but if you want to be aggressive you should consider allocating your contribution to a 100% position to one fund. That way you purchase more shares using your DCA technique - I've been doing it for years both in the C fund and S fund. This past year I purchased more than 1300 shares in the C fund. DCA does make a difference but you simply have to do time in grade. The problem now is that prices are going to get even more expensive and if you are thin and not concentrated it will take even longer to accumulate shares. There is just no way to be in a hurry - this is a retirement oriented program. My goal has been to accumulate 40,000 shares of the C fund - I'm over 34,500 shares currently. Once you get to my level the way to make larger gains is to pistol shoot and time the market. I'll probably be moving seriously in that direction after the second half of 2007. Good luck and thanks for joining.

Birch, how about a 'Caveat Emptor' after your posts?

 

[Birchtree]

Re: Enough for a million?

Why - be right and sit tight.

 

[PostOakGuy]

Re: Enough for a million?

What do you mean by my DCA Technique?

 

[Birchtree]

Re: Enough for a million?

DCA is dollar cost averaging. Apply your contribution the way that you think benefits you the most. You now have several strategies to help you make those decisions. You will buy shares every two weeks - many like to have their contributions go into the G fund because they are interested in timing and not necessarily the long way around of accumulating shares. Noel.

 

[PostOakGuy]

Forgive me cause I am kinda new at this! Your saying, one option would be to have my allocations go to my G Fund, then i can do an interfund transfer and dump the money into whatever stock I see fit at that time? Instead of having my money split automatically into the C, S, and I funds?

 

[rokid]

Forgive me cause I am kinda new at this! Your saying, one option would be to have my allocations go to my G Fund, then i can do an interfund transfer and dump the money into whatever stock I see fit at that time? Instead of having my money split automatically into the C, S, and I funds?

This is the normal definition of Dollar Cost Averaging (DCA).

http://en.wikipedia.org/wiki/Dollar_cost_averaging

Consequently, splitting your money automatically into C, S, and I is DCA.

Dumping your allocation into the G Fund for subsequent allocation into the best/worst performing fund is a form of market timing.

 

[Birchtree]

I have all my contribution allocation going into one fund every two weeks - that happens to be the C fund. This way I accumulate more shares of the fund that at the moment is the lower priced fund. However, this C fund in my opinion will out flank the other funds in 2007 - meaning the price will go higher. This bull market is destined to last a lot longer than most unsuspecting herders realize - you will have ample time to do anything you want. The fact that you are young and starting early is to your advantage and if we have a correction (and we will) just ride through it and pick up some cheaper pricing - control of the emotions is easy when you DCA.