What to do?

[dwilson]

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Well I was wondering what I should do next... I opened up a Roth IRA through Vanguard using the target 2045 fund and have a TSP with 9% contributed to it and the following allocations:

G fund - 20%
S fund - 20%
C fund - 40%
I fund - 20%

For those of you that dont know the Vanguard target retirement 2045 its just a fund that shifts as I get older and right now its 90% stocks and 10% bonds.(I think I am right on this)

Well I want to put my wife on my roth now and was just curious if I should get another fund or just keep putting money into the tr 2045. Also where would be a good place to stash some money for a house 15 to 20 years down the road?

A little background on myself I am 25 married no kids active duty air force. i have been married for 2.5 years and am currently stationed in italy so I rent. I am willing to take some risk. Thanks for any help.



Dave

 

[Rolo]

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heheyaha...time for another Itchy & Scratchy (Rolo & Azannon) episode! :^

25...nice. What are your goals? What is your time horizon? (When do you want to retire?) Identifying the "end" is part of deciding the "means".

You are looking at 15+ years, so embrace risk, capitalise on it.

Check the IRS pubs on this, but I think your wife has to have her own IRA account. I ceased doing the married thing a long time ago, so I am not too privvy on those tax laws.

Build your cash reserves for emergencies and for when you move back to the States. You may find that buying a house rather than renting is better. Barring exhorbitant interest rates, home loan money is cheap, finance it all and keep your cash invested. (Even if interest rates were high, returns on fixed investments would have high yields as well. cf. the Carter years <shudder> )

 

[azanon]

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Dave,

Looks pretty good to me. For retirement, I personally like the formula 110 minus your age goes in stocks. A lot of respected books out there (ie: 4 pillars of investing) support the notion that once you pass 70-80% stock, the risk begins to not justify the return. The formula above gradually, but not too excessively, tilts you towards preservation as you draw nearer to retirement; which is the same concept that vanguard fund follows. So I think you chose very wisely for your Roth IRA with Vanguard 2045.

I like your approach towards simplicity with your investments. I'm sort of jealous of that, and i think you'll end up doing just as fine as most anyone with less paperwork. Rolo's right, your wife will need her own separate Roth fund. You "could" choose the same one OR maybe something else. I personally selected an "aggressive growth", all stock fund, for my wife simply because I dollar-cost average into it, and the more the volatility, the more exaggerated you'll end up buying more when the price is low, less when the price is high.

To save for your house, your goal should be 20% equity, because that will get you out of Private Mortgage Insurance (normally lenders require 20% equity to avoid this charge). PMI is a very significant chage, say like 85 dollars a month on a 150K dollar home mortgage that goes to vapor. So what would i choose to save for this money? Keep it simple like you're already doing with your retirement and select a solid balanced fund. Your time horizon will probably end up being less than what you're saying (15-20 years), so I think you want something that will give near stock returns, but be far more dependable. Historically (say a century back), balanced funds have done surprisingly well, (near equity index fund returns) and a good balanced fund will only lose one out of 10 years. Balanced funds are also ingenious because they, by default, force you to buy high, sell low since the fund manager will tend to maintain a specific stock/bond ratio. Basically, i think they rock yet strangely enough, idont own one now.

Did you say you're in the military? If so, I recommend USAA Balanced Strategy, one of USAA's (few) excellent, and reasonably priced funds.

Laterz,

Azanon

(edit) If you wanna get interesting, and creative, another good choice for your house fund would be a Utility Sector fund. A decade ago, utilty stocks were thought of as steady, dependable holding with great dividends and nice apprecation too. However, they literally got bitch-slapped in the 00' crash, I think far too much so. Now, they're coming back into favor (though still below the radar screen, not getting much hype yet) and might be another great, all-stock, but dependable choice for your house fund. I currently own BULIX, American Century Utilities; only 0.64% management fee too!

 

[Rolo]

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If you are military, you can use VA benefits to avoid having to pay PMI, no down payment required.

I like Az's take on the utility sector; I may play that to give my portfolio some stability in the "now money" department.

I also like your point, Az, on volatility: it makes buying on the dips more effective.

I do not like, however, USAA anything except for insurance. Their funds are mediocre and their service is awful (except when you need their insurance). That is one company that needed to stick with their core competency only. :?

 

[azanon]

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My experience with USAA has been stellar; I use em for insurance, investments, my checking account, my mastercard (cashback), and my home and car loan. I have never dealt with more friendly people than this crew.

Their bond funds have always been well above average, and I think select stock funds of theirs (in particular USAA Aggressive Growth) will also excel given the overhaul in management a couple years back. Marsico was named fund manager of the decade by forbes magazine for the 90s (Janus Twenty manager from 87-97), and now heads USAUX. USAUX is a near mirror image of Marsico Focus (MFOCX), except with a lower expense ratio. Aswas the case with Janus Twenty (+3% in that case), he's beating the s&p500 by over1%withFocus over the past 5 years, important to note given the crash of that time period. This would be the case as well with USAA Aggressive Growth hadhe been the manager during the past 5 years. http://cbs.marketwatch.com/tools/mutualfunds/overview.asp?siteid=mktw&symb=MFOCX&sid=46005

All i can say is watch and see it continue to happen. Anyone familiar with the effects of compounding knows what just 1 extra percent above the s&p500 can do over 30 years. And to accomplish that feat with (lower risk) large-caps + active management fee is mind-numbing.

 

[Rolo]

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azanon wrote:

My experience with USAA has been stellar; I use em for insurance, investments, my checking account, my mastercard (cashback), and my home and car loan. I have never dealt with more friendly people than this crew.

They are friendly people and that part ofit is good (I only had to get irate with them once andthey eventually worked it out expediently), however, they do not appear to be very good at their job and are not knowledgeable. Mind you, I speak of little, PITA things, nothing major. Basically, they cannot follow simple instructions and they constantly botch things up. I am not alone in this experience, many here at work have the same experiences.

On the flip side, as I said earlier, I have seen nothing but good experiences with their auto insurance.My insurance (home and auto) premiums are excellent and have witnessed class A service--rarely do you see top-notch and cheaper price.

Now, if they would just quit snail mailing me "Open an IRA with us!" flyers every week (I already have two with them), their profit profit margins may slightly improve. Perhaps I should tell Warren...

 

[azanon]

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In other words, :

Their funds are mediocre and their service is awful (except when you need their insurance).

Sorry to hear your experience has been less than stellar. That's a pretty huge exception though considering most of what they do IS insurance.

One thing i did fail to mention that i really enjoy from USAA is their USAA Web Billpay service which is part of their checking account services. Basically, you can pay for bills for free online, which i'm now doing. Its pretty neat to not have to buy stamps, lick envelops, run to the mailbox anymore for bills. I know a lot of other banks are getting this now, but many of them still charge for it.

Azanon

 

[Rolo]

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azanon wrote:

That's a pretty huge exception though considering most of what they do IS insurance.

That is what I meant by they should stick to their "core competency"--their insurance appears unmatched and I will say "They rule!", but to everything else, I will say "They suck!"



azanon wrote:

One thing i did fail to mention that i really enjoy from USAA is their USAA Web Billpay service which is part of their checking account services. Basically, you can pay for bills for free online, which i'm now doing. Its pretty neat to not have to buy stamps, lick envelops, run to the mailbox anymore for bills. I know a lot of other banks are getting this now, but many of them still charge for it.

Dude. Did you just, like, sell your Atari 800 and get a PC...where've you been? heh...pretty much everybody offers that now as "standard", and have for years. Hehe, a co-worker asked me yesterday what the price of a postage stamp was. "I have no freaking clue." and I explained that the last time I tried to mail something, I had a 32-cent stamp and asked to buy a one-cent stamp. The quizzical look the teller gave me was justified since they were 37 cents at the time! I thought they were 33 cents. D'oh.

Which leads me to another reason USAA is a PITA: they want you to mail stuff all the time or use another technological relic: fax machines. :XI would bet that a lot of retired government workers run USAA based on the heaps of paperwork and beuracracy involved.

I use NetBank. Great service, no paper, works with Quicken, top yields, and I do not have to repeat my instructions to them using monosyllabic words for comprehension. :^

 

[azanon]

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Dude. Did you just, like, sell your Atari 800 and get a PC...where've you been? heh...pretty much everybody offers that now as "standard", and have for years.

Yeah its becoming pretty big, but some still charge a fee for it. That being said, only a relatively small percentage of the population are actually paying their bills online at this time. So I wouldnt exactly characterize me as a fossil, so to speak.

I still am very confused you have found any of USAA's staff as ignorant, and mistake prone. Maybe.. maybe once or twice i caught a mistake on something, and that's given all their services I use. Everytime i get one of them on the phone, i find them to be intelligent, friendly, and willing to assist me.

However, its time you sell your atari 800 and quit calling them. Most all of their services can be utilized on their website. Its rare I have to actually call them. I do have to send an occasional email though.

(btw, my first atari was an atari 2600. There was an atari 800? And i thought i was old, /snicker).

 

[Rod]

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Up in my attic are:

Atari 2600

Coleco Vision

Commodore 128

GREAT INVESTMENTS!!! hehe:^

 

[Mike]

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I concur: Netbank is the shizznit.

And yes, most banks offer free online transactions... although if you want to do more advanced banking transactions online, at least a few will charge you a small amount for the "premium service" which provides that (i.e. to do EFT's to other accounts).

 

[Rolo]

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azanon wrote:

So I wouldnt exactly characterize me as a fossil, so to speak.

You are either wired or you are a fossil. Welcome to the 21[suP]st[/suP] century!

What kills me is people in a store writing checks. WTF is up wit dat? Get with the program, people! :X Sometimes I say to the poor clerk watching the line grow, "Checks? They still have those? Wooooow."

azanon wrote:

However, its time you sell your atari 800 and quit calling them. Most all of their services can be utilized on their website. Its rare I have to actually call them. I do have to send an occasional email though.

Ummm...yeah.....they call me. I asked that they e-mail instead--but they don't have e-mail! Believe me, I prefer to not talk to people, so I do not go looking to do so.

• "We noticed you contributed too much to your 2004 IRA."
  • "Nooo...I made the contribution in 2004 and explicitly stated it was for tax year 2003." As if my taxes weren't enough hassle.
• "We need the bill of sale of your car in order to renew your insurance or we need to see it or take photographs of it."
  • "Umm...you guys already have that and you have the lien on it."
• "You're transaction was declined because we don't want you to withdraw that much."
  • "Let me get this straight: you are not permitting me to withdraw my money? I want it now, or I will report theft." They advised me that I would be hassled everytime I wanted a large amount at once. I closed my account after that fiasco.
• Just yesterday I got a letter merely telling me that I was going to get another letter! OMG!

azanon wrote:

(btw, my first atari was an atari 2600. There was an atari 800? And i thought i was old, /snicker).

The Atari 400 and 800 were computers, made after the Atari 2600, 5200, and 7800, which were video game consoles. Since all my friends had Atari's, I, being the dissident, had an Odyssey[suP]2[/suP]. KC Munchkin was much better than Pac-Man! (Atari sued Magnavox over the similarities in the game; it was a big deal.)

Rod wrote:

Up in my attic are:

Atari 2600

Coleco Vision

Commodore 128

hehehe...About two years ago, I finally forced myself to part with all of the Commodore 64/128's I had in the closet (I used to fix them). C64S, a Commodore 64 emulator for the PC works perfectly. MAME is an Atari 2600 emulator, so I got rid of my 7800 as well. I had a ColecoVision as well...rare to see those nowadays. ahhh...nostalgia.

baha...Whatdahell were we talking about? Ah, yes, dwilson opening another IRA account...

 

[Rod]

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Rolo wrote:

The Atari 400 and 800 were computers, made after the Atari 2600, 5200, and 7800, which were video game consoles. Since all my friends had Atari's, I, being the dissident, had an Odyssey[suP]2[/suP]. KC Munchkin was much better than Pac-Man! (Atari sued Magnavox over the similarities in the game; it was a big deal.)

I remember the Odyssey! I actually owned one too. And yes, KC Munchkin was very cool. Once Intellivision made its debut, I was very impressed with its baseball!:^

To look at it all now, would well... simply look like a bunch of pixels!

 

[Mike]

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Have either of you heard of the Intellivision? It had funky rectangular (lengthwise) controllers with overlays and a round disc that you had to press with your thumb, usually for movement in the games. I think it came out in the early '80s.

 

[Rod]

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Mike wrote:

Have either of you heard of the Intellivision? It had funky rectangular (lengthwise) controllers with overlays and a round disc that you had to press with your thumb, usually for movement in the games. I think it came out in the early '80s.

I just mentioned it in my last post!:dude:

 

[azanon]

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"You're transaction was declined because we don't want you to withdraw that much."

Please tell me you're lying. If i ever hear that, there might be a fatality in San Antonio.

 

[Rolo]

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azanon wrote:

"You're transaction was declined because we don't want you to withdraw that much."

Please tell me you're lying. If i ever hear that, there might be a fatality in San Antonio.

Nope. I ordered $6K worth of stuff from NewEgg; I had $18K in my account. Arguing with them enabled me to withdraw up to $9600/day temporarily for one week. That is all I needed to withdraw it all.



Rod wrote:

Mike wrote:

Have either of you heard of the Intellivision? It had funky rectangular (lengthwise) controllers with overlays and a round disc that you had to press with your thumb, usually for movement in the games. I think it came out in the early '80s.

I just mentioned it in my last post!:dude:

...and causes memory loss later in life, heh.

Yeah, a friend of mine had an Intellivision and those controllers had a learning curve. There was a racing game we played all the time. Some of those games I still miss; the lesson to be learned is that technology and effects are no substitude for good game fundamentals and dynamics. (Just like movies: special effects do not compensate for a crummy plot.)

 

[azanon]

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So what the heck are they going to do if i write a 32K dollar check out of my money market fund to buy a car (STi ) ? they better honor it.

 

[tsptalk]

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Mike wrote:

Have either of you heard of the Intellivision? It had funky rectangular (lengthwise) controllers with overlays and a round disc that you had to press with your thumb, usually for movement in the games. I think it came out in the early '80s.

I loved their football game.

 

[Guest]

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My son, about 6 months ago came home with this gamepad looking thing that he plugs into the television. That is all that it is, no console or anything. He paid $9 for it. Would you believe that it was Intellivision? It had football, baseball and some other stuff on it. Just a gamepad, some buttons and a cable that plugged into an RCA. Unfortunatley, you couldn't play against each other, just the "computer". Also, I never figured out how to pass in football. Can you believe that? $9!! Do you remember how much Intellivision cost back then? I loved it, too (In the early 80's, that is)

Does anyone remember pong?

Joel