Thread: ChemEng's Account talk...

Stupid after 12pm market flip-flops.

I went from 100%G to 30%G, 30%C, 40%I. The dips this morning were strong enough to trigger a buy. But since there is still some uncertainty about what can happen tomorrow and how the market will react, I didnt go 100%. First, I kept 30%G as a reserve for another buy should there be another drop tomorrow. Second, I put 30%C instead of 30%S because the C tends to be less volatile than S even though VERY strongly correlated.

Im not sure how to plan tomorrow since the minutes arent released until 1400EST. Anyone think that there's any chance that we'll get an indication before 1200? What strategies is everyone using tomorrows IFTs?

Finally, a day ends in the positive! I think tomorrow Im going to move back into 100%G. Well see how the market moves tomorrow morning...

It looks like a good day for C, S, and I finds (finally). So I moved my 100%I postion into 30%C, 30%S, and 40%I. Im kind of hesitant of staying 100% in 1 fund for long, so this move will help spread the risk instead of pool it.

CPAC didnt mess up this job offer! (No offense if you work for CPAC. I have had a string of bad experiences with them.) And my brand new GS13 job starts Monday.

More money means more savings. More savings means more money to put in TSP...

*high-fives self*

Ok. All better now. And now back to your regularly scheduled program.

Originally Posted by ChemEng

CPAC didnt mess up this job offer! (No offense if you work for CPAC. I have had a string of bad experiences with them.) And my brand new GS13 job starts Monday.

More money means more savings. More savings means more money to put in TSP...

*high-fives self*

Ok. All better now. And now back to your regularly scheduled program.

More money to put in TSP means more spending power when you retire ...
Congrats to your new position.

Ocean

Thanks for the congrats.

Today I went 50/0/10/20/20. I wanted to pull in some of the gains from the past few days and start looking for another buy-in time. Maybe, just maybe, tomorrow will get the penny instead of tonight but I doubt it. Well see how it goes...

Sold out of C/S today for a day or two. I got the fear about tomorrow for many reasons. If tomorrow is down, then will buy back into stocks strong. Else I will look into shifting into F fund.

Additionally, I think I will start using the F fund instead of the G fund to protect capital with at least until the next interest rate announcement.

Geez... My strategy is starting to look similar to EbbnFlows...

Ive been talking in the IRA group about Roth IRAs and decided to crunch some numbers to help inform my decision. Basically, I want help to make sure that I did the math on the attached spreadsheet right and that my assumptions arent wrong or too aggressive.

Heres the assumptions I made:
1. 30 years until retirement. After that, a 30 year annuity is set up.
2. Average growth rate will be 5% for Roth and TSP.
3. 2% COLA increase will increase TSP contributions yearly (above the % contribution).
4. In 2010, Roth contributions will began to increase at 2%/year.
5. I keep 5% contribution to TSP even with Roth to maximize matching contributions.
6. 30% tax rate on income taken from TSP.

If that is reasonable, it looks like a $20K/yr difference investing in Roth. That is much more significant than I initially though. How close is this analysis to the mark? Did I miss anything?

*high fives himself for finally putting the MBA to work*

Examining your spreadsheet, it appears you are comparing the after taxes average yearly withdrawal from a combination of Roth and TSP (columns B-E) with just contributing to your TSP (column H and I). Is this what you are comparing?

The average yearly withdrawal rate from Roth+TSP ($71,685) is in error and should be $53,991 because in the formula F31 should be changed to read E31. Cell F31 is the sum of Roth and TSP final values, whereas E31 is just the TSP final value. I cannot verify the formula you used to arrive at the average yearly withdrawal amount to deplete you funds in thirty years. I don't have time to derive it now. [i.e. Average yearly withdrawal = (Final Value*1.05^30*0.05)/(1.05^30-1)}.

If you are comparing Roth+TSP with TSP why is the contributions for just TSP not equal to sum of the contributions to Roth and TSP?

Here is URL to a money article on advantages of Roth over traditional 401K and IRA. http://money.cnn.com/magazines/money...2153/index.htm

That is what I am comparing. Although with the Roth and TSP, I only taxed the returns from the TSP. Is this the comparison I should be making?

It should be E31. Thanks for catching the mistake in the formula.

The reasons that Roth+TSP <> TSP is because they are done on different tax bases. If you adjusted the Roth to pretax money, then they should be equal. Or I guess you could add the amount of tax that a given TSP contribution would generate to Roth and TSP which should also be equal.

Ill update the spreadsheet. Will do some what-ifs with it tonight. But based on that correction, it doesnt look like much of a reason for going into a Roth based on the dollars. Control, availability, and options are considerations in favor of the Roth. But strictly from a dollar perspective Im not seeing the advantage.