Semi- New to TSP, New to Forum

[Bcf0514]

Hey Im just starting to get serious about investing and learning what I can. I just got in Baghdad to start my tour. I currently invest 5% of my pay into my TSP but also throw in about 10% into a diversified stock account which has surprisingly done above market so far.

I dont make enough to max out my TSP because Im paying off debt aprox. $8k left. (car, student loans, ect) and hoping to look at getting married and buying a house when I get back.

Should I keep doing the 5% into my TSP or should I send that 5% into a Roth since I will be in a higher tax bracket when I get older (Im 23 now, about to graduate with a BS, and hopefully going to law school).

Thanks

[CapeChem]

If you are FERS the gov't is matching your 5%.....I would keep getting those matching funds as long as possible

[CapeChem]

oh .....and .....welcome to the MB

[Bcf0514]

If you are FERS the gov't is matching your 5%.....I would keep getting those matching funds as long as possible

I googled FERS and dont belive im in it, but I also have never heard of it before. Im in the National Guard, so normally im not a federal employee. I havent heard of them matching any funds.

[tsptalk]

Welcome Bcf0514! Thanks for your service!

Yeah, I doubt you're in FERS. At your age, just getting something churning and burning this early is a good start. The TSP will be about the best you can do fees-wise, but a Roth will give you more investment options. But it looks like the TSP will be offering a Roth option before long as well.

[Bcf0514]

Welcome Bcf0514! Thanks for your service!

Yeah, I doubt you're in FERS. At your age, just getting something churning and burning this early is a good start. The TSP will be about the best you can do fees-wise, but a Roth will give you more investment options. But it looks like the TSP will be offering a Roth option before long as well.

Right I have a few grand in there, but like I said I just really started to pay attention. From what Im reading (correct me if Im wrong please )

The main difference between the TSP and Roth now that Im in a tax free zone and expect my income to be greater later in life is that the earnings on the TSP would be the only taxed part, where as 100% of the Roth earnings and withdrawl at a higer bracket would still be tax exempt.

So my guessing is pay the low bracket taxes now, start diverting the money to a Roth for tax free earnings and withdrawl in a later higher tax bracket.

Also I am going to do the SDP with the guarenteed 10% which imo is a no brainer

[XL-entLady]

Thanks for joining the group! We're all learning together so don't be shy about asking questions.

And thank you for your service!
Lady

[charmed855]

Right I have a few grand in there, but like I said I just really started to pay attention. From what Im reading (correct me if Im wrong please )

The main difference between the TSP and Roth now that Im in a tax free zone and expect my income to be greater later in life is that the earnings on the TSP would be the only taxed part, where as 100% of the Roth earnings and withdrawl at a higer bracket would still be tax exempt.

So my guessing is pay the low bracket taxes now, start diverting the money to a Roth for tax free earnings and withdrawl in a later higher tax bracket.

Also I am going to do the SDP with the guarenteed 10% which imo is a no brainer

Yup - right on. Max the SDP and Roth and throw whatever's left in the TSP.

[Steadygain]

Hey Im just starting to get serious about investing and learning what I can. I just got in Baghdad to start my tour. I currently invest 5% of my pay into my TSP but also throw in about 10% into a diversified stock account which has surprisingly done above market so far.

I dont make enough to max out my TSP because Im paying off debt aprox. $8k left. (car, student loans, ect) and hoping to look at getting married and buying a house when I get back.

Should I keep doing the 5% into my TSP or should I send that 5% into a Roth since I will be in a higher tax bracket when I get older (Im 23 now, about to graduate with a BS, and hopefully going to law school).

Thanks

Hi, I'm Steady and was just about to close down but noticed 'Charmed' and so I popped in.

You should definately keep the 5% going in the TSP - because that instantly DOUBLES with the 5% matching.

Also - being the outstanding 23 year old adult you are - you're asking this question towards the end of a very servere Recession; but THINGS WILL GET BETTER and over the years you will have incredible growth. It's not just the USA - it's pretty much the whole globe - so changes are being made to keep things running better.

Most importantly the TSP is not for the here and now - but for 45 years from now. That is the main problem with this site - and it's not intentional - but too often it's easy to think of the here and now and forget this is a RETIREMENT ACCOUT meant to last over the years.

OK - so I'll stop with the 'father' lectures

THANK YOU for serving your country with a great attitude and for being in Baghdad to start your tour.

THANK YOU for throwing in about 10% into a diversified stock account

MY FRIEND - IT IS VERY RARE THAT A 23 YEAR OLD WOULD HAVE THAT KIND OF WISDOM - THAT'S OUTSTANDING AND DOWN THE LINE YOU WILL SOUND LIKE 'BIRCH' OR 'CAYMAN'

Im paying off debt aprox. $8k left. (car, student loans, ect) and hoping to look at getting married and buying a house when I get back.

I promise you that right here and now there is NO ONE on this entire MB that I respect and admire more than you.

Your priorities are outstanding - you will be debt free because you have the best mindset possible. Trust me if you pick out your spouse with the same magnitude you're doing everything else you'll have a marriage filled with happiness and endless blessings.

THANK YOU - FOR YOUR WONDERFUL EXAMPLE

What a great read to end the day!!

Steady

[PessOptimist]

Hey Im just starting to get serious about investing and learning what I can. I just got in Baghdad to start my tour. I currently invest 5% of my pay into my TSP but also throw in about 10% into a diversified stock account which has surprisingly done above market so far.

I dont make enough to max out my TSP because Im paying off debt aprox. $8k left. (car, student loans, ect) and hoping to look at getting married and buying a house when I get back.

Should I keep doing the 5% into my TSP or should I send that 5% into a Roth since I will be in a higher tax bracket when I get older (Im 23 now, about to graduate with a BS, and hopefully going to law school).

Thanks

Welcome, there is a lot of good info from the denizens of this board. I have some thoughts about things you should consider about your investments. But first I must yell at the mb members.

PLEASE STOP TELLING ACTIVE DUTY MEMBERS OF THE US ARMED FORCES THAT THEY GET MATCHING FUNDS. I SEE THIS OVER AND OVER. I REFER YOU TO http://www.tsp.gov/uniserv/features/chapter04.html WHICH STATES

Who is entitled to receive matching contributions?
Under the law that extended the TSP to the uniformed services, the secretary responsible for each service may designate critical specialties for matching contributions. Members serving in those specialties who agree to serve on active duty for 6 years may be eligible for matching contributions during the 6-year active duty obligation.


The matching contributions apply only to amounts contributed from basic pay and not from any incentive pay or special pay. If you do not contribute basic pay to the TSP, you will not be eligible to receive matching contributions. Matching contributions apply to the first 5 percent of pay that you contribute each pay period. Your contributions are matched dollar-for-dollar on the first 3 percent of pay you contribute each pay period and 50 cents on the dollar for the next 2 percent of pay.


As of the date of this Web edition, matching contributions had not been authorized by any of the uniformed services. Your service will notify you if you are eligible to receive matching contributions.

THE BOLD ITALICS ARE MINE. STOPSTOPSTOP.

Now that I have gotten that out of the way, saving is always good. As a retired lifer, I have been reminded over the years how much I would have if I had bought savings bonds over the years. That was the big push in my day, no TSP even to when I retired.

Putting money in the TSP is good because of the fees involved (none) but you do not say what funds you are in. G pays a guaranteed return but not a lot. C, f, S and I may pay more or less. You need to check this out either through this site or at www.tsp.gov.

The SDP is a program that has been around for 40 years plus or minus. A couple of things to keep in mind about the program are that it stops paying interest 90 days after you no longer receive hostile fire pay. All interest accrued is taxable, I assume in the tax year you depart the combat zone. Check it out at http://www.dfas.mil/militarypay/woun...hure_Mar08.pdf

The ROTH thing...I have posted questions here and gotten mixed replies. You need to check out if you can deposit tax free pay in a ROTH IRA and still withdraw the money tax free later. If so, good deal!

Saving money some where is never bad.

Keep safe

[roskopfm]

Its a no brainer, stop the TSP and Maximumize the Roth. If you have any left then put it in the TSP. You being overseas, you dont pay federal taxes on that money. Money invested in TSP if you are overseas is different. Since your pay isnt taxable anyway being in a war zone when you pull it out it wont be taxes either, but all earnings will be.

For example, If you put in 5000 in the TSP this year, none if it is taxed even if you didnt contribute it since your in a war zone, then say you retire that accumulates to 20,000. you would pull 5000 tax free and pay taxes on 15,000.

If that same 5000 was in a Roth , you would pay zero taxes on the 20,000.

On a side note, even if you were stateside and were in the 15% tax bracket. You would pay taxes on the 5000 you put in the Roth vs the TSP, which would be 5000*.15==$750 Now when you retire more than likely you will be in a higher tax brakcet and will pay no additonal taxes. Stop the TSP now and put it in the ROTH NOW!!!!!!!!!

[JTH]

You mentioned going to Law School. Does this mean you plan on doing a full 20 years in the service?

Reason I ask, is that if you plan on being in for the full 20, than I'd consider fully investing in the TSP while deployed, than while at home sink more into your ROTH.

If anything, the TSP can be a handy loan vehicle.