Question

[Cajun_1978]

I have been giving to the TSP for about three and a half yrs now. I started out just contributing to the G fund for the first year and a half then I moved everything into the I fund. Looking at the history of the I fund I noticed that it's avarage return was about 20% so I thought it would be a good idea to be risky and put it there for awhile. Was this a bad move?
A little background info on myself, I am currently an E-6 I have been in for 12yrs. I started contributing when I first put on E-6. I started at 4% and am currently contributing 10%. As of right now I plan on staying in until at least 20yrs. And I'm not sure how I'm going to take out my money (installments, lump sum, or let it stay in the TSP for awhile after I retire?)
And is it true that if the market is down your buying stock at a lower price? And when the market goes back up and your holding all of this stock that you bought low you will make money? Is this how it works? So should I stay with my money in the I fund and wait for it to come up again? Keep buying low and reap the rewards when it comes back up?
Please help me understand what I'm doing. Sorry if this sounds stupid, I just want to make sure I'm doing the right thing. Thanks.

 

[Show-me]

Cajun,

Welcome and it is not a stupid question. With your time frame you ARE doing fine and buying at cheaper prices. The only thing I would do different is to diversify across the three equity fund because the best performing one changes from time to time. This way you get a average of all the funds. One of my earliest comparisons of the C, S, and I fund was that they all follow each other just at different rates and picking the best performing one is very hard to do.

First priority in investing is if it is available get the matching funds. I also want to mention Roth IRA's which are set up by you individually. Think about the National Debt and ask yourself if income taxes will go up. Contributions to a Roth are after taxes but the earning and the withdrawal is never taxes again. This is especially sweet if you are in a no tax zone and you contribute to a Roth, you are in essence getting over by not ever paying taxes on that money.

Thanks for asking and thanks for your service.

 

[Cajun_1978]

Cajun,

Welcome and it is not a stupid question. With your time frame you ARE doing fine and buying at cheaper prices. The only thing I would do different is to diversify across the three equity fund because the best performing one changes from time to time. This way you get a average of all the funds. One of my earliest comparisons of the C, S, and I fund was that they all follow each other just at different rates and picking the best performing one is very hard to do.

First priority in investing is if it is available get the matching funds. I also want to mention Roth IRA's which are set up by you individually. Think about the National Debt and ask yourself if income taxes will go up. Contributions to a Roth are after taxes but the earning and the withdrawal is never taxes again. This is especially sweet if you are in a no tax zone and you contribute to a Roth, you are in essence getting over by not ever paying taxes on that money.

Thanks for asking and thanks for your service.

Thanks Show-me,

Should I start diversifying now or wait a little longer?

 

[Show-me]

With your time frame any time you pick will be good. You are a dollar cost average (DCA) investor and have time on your side, but you should look at your diversification at minimum yearly and I would say quarterly.

Once you build a account and get closer to retirement you want to lighten up on the risk in the equity funds.

One of my older friends at work uses the 200 dma on the S&P as a indication of if he should be in the market or not. He has a larger balance than me. Basiclly if the 200 dma is going up he is in the market, if it is going down he get out and watches from the side line.

Good luck!

 

[Cajun_1978]

Once again thanks SM.

 

[Cajun_1978]

I went ahead and changed my contributions to the L2040 plan for now. I figure when I get closer to retirement I'll set it to a less risky plan.

Another question that I have is when I retire from the military can I just leave my money in the TSP account without making contributions? Can I still make money this way?

 

[Gumby]

I went ahead and changed my contributions to the L2040 plan for now. I figure when I get closer to retirement I'll set it to a less risky plan.

Another question that I have is when I retire from the military can I just leave my money in the TSP account without making contributions? Can I still make money this way?

Yes, if you have more than the minimum, I believe $300 in TSP, you can leave it. You can still make IFT's and make money if you are in the right funds at the right time.

 

[peterson82]

L2040 changes its allocation every day to a lesser and lesser risky allotment. So slowly, that by year 2040 it will look like the LINCOME fund currently.

 

[turbo23dog]

X2. See the mix change as years progress here: http://www.tsp.gov

Click on the "L" and then choose L2040. The graphic shows how the distribution changes across the funds as time progresses to 2040.

 

[Rod]

Welcome.

You will receive many opinions, and here is mine-

If you diversify because you are clueless, that is a huge mistake. Diversification in any form becomes a crutch and a crapshoot when you are clueless. Just look at the majority of Americans who have lost thousands in their 401(k)s or IRAs these past few months because they did not take the time to learn, but entrusted their financial future to a "stranger".

You should only diversify across certain funds as you begin to learn the ins and outs of each fund and the stock market itself. This way you will be empowered to know how they will react to market conditions and you can play them individually. This will take effort and will require a tremendous investment of time to learn. But the rewards can be great!

Educate and empower yourself (not a broker), and do not fall back on continually "diversifying" because you lack the knowledge. There's no shame in remaining in the (G) Fund until you learn the ropes. Heck, I haven't been in stocks yet this year and I'm on track to end the year UP 4.5%. But, that's not because I have not learned the funds, but because I have learned. That's not to say I'm a guru, because I am not. I simply have a drive and desire to control my financial future to the best of my abilities. It's up to you how much you want to learn, and it helps when you surround yourself with like-minded individuals like the fine folks on here.

As Spaf would say, Be careful out there!

-Rod

 

[Cajun_1978]

So what do you you look out for Rod? Advice on what I should shouldn't do at this point? Should I have kept my contributions in the I fund? Some help please.

 

[Rod]

So what do you you look out for Rod? Advice on what I should shouldn't do at this point? Should I have kept my contributions in the I fund? Some help please.

Well, if you do not understand the ins and outs of the TSP Funds, I would begin there and learn about each one. I would then begin following the market on a daily basis around those Funds and educate myself about how they are affected by Mr. Market.

My philosophy is simple, educate yourself about why you are investing in what you are investing in. If I had to do it all over again, I would have remained in (G) until I at least learned about the TSP Funds and had a basic understanding of the markets. I, like many new investors, played the diversification game in ignorance. I, or anyone else, can sit here and offer advice until the cows come home. But, you need to empower and educate yourself to become your own financial advisor. That's an ODD task because mainstream America leaves that in the hands of their brokers, and they've nearly made them BROKE.

Why do you think they are called "Brokers"???

Go Get'em!

Here's a good place to start-

http://www.tsp.gov/rates/fundsheets.html

Click on Fund Sheets on the right.

-Rod