Thread: Allocation.....EASY QUESTION

SNOWMAN819 wrote:

Good day, all. I am a CoastGuardsman and I have been contributing for a couple years. I am still young, but heres the question:

IN YOUR OPINION, how should I allocate my money? It's in the G fund right now, and has been. I dont mind the riskiness of short term investing, but that is irrelevant for me, as I won't retire for about 20 years.

I am just asking for opinions. And yes, I have done my homework and studied historical rates of return and what-not......Just looking for some human input.

Semper Paratus.

I would stay in the G-fund until the market decides if it is going up or down. I think there will be better times later in the year to buy into the stock funds. But what do I know?

Want to see where many of the active members have their money? You came to the right message board. Want to know how they have been doing? See the link below:

http://www.tsptalk.com/mb/forum21/1581.html

Greg is right, sort of. If you knew when to buy and sell exactly, you'd have spent much of this year in the G-fund. Long term stocks are better. Depends on how much trading you want to do. Look at the Tally. You will see a few who outperform the market and a few who under perform. I'll tell you that I respect some of the underperformers because long term they have proven they can beat the market. They may have taken a hit here recently but they will bounce back. You will find most people (except Greg) have moved into stocks because they think the market is about to turn around. If you have been in G-fund for awhile, now may be a very good time to "buy" into stocks because they are cheaper now than they have been for awhile. The market may go down some more, but long term it is headed up.

If you are new to trading, I suggest going long in stocks and then paper trading for awhile to see if you can do it yourself. If you are young, you really should be long in stocks if you are not moving your money between funds and not in the G-fund. Or, do like many here and follow Tom or one of the other experianced traders until you get the hang of it yourself.

greg wrote:

I would stay in the G-fund until the market decides if it is going up or down. I think there will be better times later in the year to buy into the stock funds. But what do I know?

Greg,

Long term, what allocation would be your advice to him?

Pyriel

Snowman819,

As a CoastGuardsman you may well be in a risky business, but with 20 years to go common sense says go to the C fund 100%, and don't worry. Ride the ups and downs with your payroll dollar cost averaging contributions. It's the only way you will move ahead with any accumulation. Actually the longer the C-fund takes to reach it's prior peak and beyond, the better off you are. You pay less for your shares. It takes money to make money. Read my post in Swop under fund formula and you will see a contrarian in action. Dennis

pyriel wrote:

greg wrote:

I would stay in the G-fund until the market decides if it is going up or down. I think there will be better times later in the year to buy into the stock funds. But what do I know?

Greg,

Long term, what allocation would be your advice to him?

Pyriel

I don't think a person should put their money in one allocation and then forget about it and just hope it goes up. I think there is times to be 100% in C and times to be in the other funds and in be 100% G when the market is going down.

If someone was going to put their TSP in one allocation and forget about, I would recommend 100% C.

I would advise him to put his bi-weekly contributions in C or S so he can cost average. Then wait til this summer when he thinks that the market has bottomed out and then move his G-fund to the stock funds.

But what do I know?

Thank you folks for your intuitive responses. I have changed to 50/50 between G and C...just to get a feel for things.

Heres a question.... With a ROTH, you do NOT pay tax on interest. Do we pay tax on our TSP earnings when we go to take it out?

Overall feelings on ROTH vs TSP ?



Thanks Again!

Snowman

SNOWMAN819 wrote:

Heres a question.... With a ROTH, you do NOT pay tax on interest. Do we pay tax on our TSP earnings when we go to take it out?

Welcome snowman!

Yes, TSPinvestments are made with tax freemoneybut you get taxed on both the principle and income when you take it out.The Roth is invested after taxes have been taken out of your pay and as you said, earnings are not taxed upon withdrawal.

Snowman,

With time on your side it would be a good idea to have both accounts. You are limited to $4000 contribution in 2005, but this goes to $5000 in 2008 and is then indexed to inflation going forward. The nice thing about a Roth is that if you ever need to borrow some money you can without hassel. You just can't take out the money that your money has earned, otherwise yoiu don't even have to worry about paper work. Open an account with an online broker and buy stocks-that way you begin to get dividend reinvestment dollar cost averaging.