I appreciate all the help & suggestions. Currently, staying in the TSP seems the best option. I have 18 months minimum left with the Army, Its allocated automatically prior to taxes, & financially smarter for me currently. I will however look into an IRA option, if I can fit it into my budget. I did some researching and my credit union offers these options.
I reviewed others movements on the autotracker & found some interesting maneuvers. I will be researching the small cap S fund, as well as continue to monitor the I fund in the future.
I noticed S & I funds seem to follow S&P rise & fall trends. Is this obvious, or coincidence?
In 2008 and 2009 the F/C/S/I funds acted in concert. That is not normal. Those years were very 'AbbyNormal' years. This year is a bit more normal. You can watch the flow of equity assets (C/S/I) into bond assets (F) and vice versa over the year. Rather normal. You can watch assets move to equity November through March and bail out in May. Normal. Normally, your S Fund will average higher than C/I - but will fluctuate more. Normally, the F Fund will move inversely to the equities holdings. The G Fund is almost cash in the bank.
Anyway, the next move should be an equity move.
If you are not tied into the market like Gordon Gekko the best bet is to hold an allocation of funds that fits your risk. If you quiver at a daily loss of a half point don't invest much in equities - but you won't have much in retirement. If you can handle a dump of 10% in a month hold lots of equities - and, you should be eating caviar and oatmeal for breakfast in your golden years.
My guess is that you can accept risk. So here are some Edelman allocations that might suit you (I highly recommend his 'The Truth About Money' and his 'The Lies About Money'):
Normal Allocation (Normal Market)G: 0%Risky Allocation (Expanding Market)
Average Return: 9%
Average Risk: 11%
G: 0%Risk Adverse Allocation (Crappy Market)
Average Return: 10%
Average Risk: 13%
G: 0%Great Depression Market Crash (2008)
Average Return: 8%
Average Risk: 10%
Average Return: 2%
Average Risk: 2%
Risk is not really 'risk'. It is the normal expected variance (the standard deviation). What that means is that in a normal market with a 'Normal Allocation' you can kinda expect a 9% return - but, it can swing from a -2% return to a +20% return and still fall into expectations. You have to accept a potential expected loss of -2% in any particular year to feel comfortable in the allocation I call 'Normal'.
The big dump we had from 10/2007 through 3/2009 was a -57% in the C Fund. That is 6 standard deviations from expected. That is a crash.
Again, Edelman's 'The Lies About Money' has a very nice quiz to set you to a good allocation that you can play with as you gain experience. His website has something called the GPS which helps you set an allocation that fits your profile. The questions are easy to answer and take minutes.
Playing a swing trader right now will probably guarantee an Alpo/Oatmeal diet in retirement. You have to be able to read the squiggly lines on charts and look at the fundamentals of companies in an index to win at that game.
Finally, set your contributions to buying equities - even in a downturn. Maybe a 40% C, 30% S, 30% I. Very yummy in a market crash. Rubbing belly right now.
Finally, finally, finally, how reluctant are you to spending $15 on a very good book on personal financial management and spending a couple days reading it? It will net you millions. Honest. And my name is neither Ric nor Ray - although Ray Lucia's office is spitting distance (and a scary run across a busy freeway) from my humble abode.
Lookin' up at the 'G Fund'!!!
Good advice. Your "very yummy in a market crash" numbers were along what i was thinking of looking into. Curious if theres any objections to your suggestions.......Turbo made a suggestion of the L2040 fund, which isnt too far off from between "crappy market", "expanding market", and "very yummy in a market crash" numbers.
Obviously, the L funds are just lazy.....but not too far off.
Turbo's L2040 recommendation results in:
G: 10%It is closest to my 'Normal Allocation'. Not even kinda clost to conservative or expanding. Those 2% changes are huge when compounded for years. And the risk thing matters a ton.
In the end, till you get a feel for asset allocation, the L2040 is a great place to be. The 10% in the 'G Fund' is kinda dead money for someone in their 20's - but the L2040 will self correct as time moves on. The individual funds have to be managed by you.
Also, discussion of contributions is radically different from discussion of allocation. You want the market to be cheap when you buy (contributions from your pay check). But, if you want to play with the money already in your account you can fudge your allocation based on where you think the market is going.
Regardless, start with the L2040 then pick a few folks from the AutoTracker and see if you can stomache their gains and losses. You will form your own style.
And - based on this years returns - my guess is that you won't look at the chap in position 159. Yuk, yuk...
Lookin' up at the 'G Fund'!!!
I understand, the L comment was silly. Its a "autopilot for the rest of your life" -fund.
2% isnt too far off, when comapred to the fact that I sat 100% G fund 6 months, then 100% I fund 12 months. Currently, the C & I funds are at the highest they've been since 09/2008, and the S fund is at the highest its been since 06/2008.
I want to move into these funds, but not while theyre at a 2 1/2 year peak. I feel I should wait to see what the C, S, & I funds are going to do before I move there. G fund money is money in the bank, which is why I just went 100% there, but it was not a long-term move by any means.
Gains & losses I can stomach if I know the end result is a gain. But....by not monitoring my funds, its been easy to stomach what you dont see .
I plan on buying a book before long.
I admittingly could be way off....these funds, and the market could go skyrocket. This impulsive move could have been way off by not paying attention to the economy. And I will miss out on making more money. I just feel they will go down again before they go up up & up. Then, I can stomach taking the advice given to me to go into some equities holdings.
We are still -25% from the highs in the 'C Fund'.
If you are concerned about the market you might want to move some assets to the G/F Funds. Maybe 30% - 50%.
That would leave you 50% - 70% in the equity funds if you are wrong. You will take part in some of the gains while simultaneously reducing your risk of loss.
I have personally learned my lesson in the 'G Fund'. It doesn't have enough growth power to overcome any losses in C/S/I (and, I bet, the F Fund as well). I view it as a cash holding area. Useful in a market crash, not so much any other time.
Most here will warn you off the 'F Fund' right now because inflation - or the threat of inflation - will smash it. The 'F Fund' seems kinda bubbly.
On the other hand, the equities funds seem to be returning to the norm.
What I am recommending is a more balanced approach. I wouldn't guess the market. I wouldn't swing the market. Only a few in this site effectively do it - and, they seem to have some serious experience in doing so.
Anyway, happy hunting.
Lookin' up at the 'G Fund'!!!
Well, last few days spent getting the wife somewhat interested in learning. Looked at ING Direct as they are advertising a no account minimum or inactivity fees. Not sure about their trading fee's though, but may be something to drop $50 into & see how things work.
My local Barnes & Noble has a copy of Truth about Money. Probaby head about to pick something up. Unsure if this one would be better than Lies about money.
Other thing is, looked at individuals on the autotracker some more. Being a noob to all this, I have to ask out of ignorance.....Ive been given advice of considering just possibly following a random individual on the tracker. Follow his moves for perspective, or financially mock his moves.
- If say Intrepid Trader or AviatorGuy are in the top 5, with +20% returns.....why is everyone not mocking their moves to place 100% of IFT allocations (or is it contributions?) from say, the S fund on the first week, then move to the C fund on the 4th week?
This, versus Bogies maneuvers & recommendations of percentages broken down between 3 indivdiual funds......and sitting at 159th position?
Im not trying to throw anybody under the bus.....its an honest (and not smarta$$) question.
I decided on Saturday to change my contributions from 100% I fund, to Bogies "Yummy market crash" numbers of 40% C, 30% S, 30% I. Its most likely a temorary move, maybe not the best for the market, but has to be an improvement over contributions 100% I fund since 11/2009.
My TSP balance is still sitting in the G fund until I decided where to place it. Being new to all this, trying to follow posts here have been confusing as I didnt even remember until day 3 of posting here that I have 2 different maneuvers in the TSP, allocations & contrbutions.
Hey, I never claimed to be the sharpect tack
I could probably speculate the answer myself. I'd just like to verify my thinking is correct. Since this may be treading dangerous waters, anyone may feel free to PM me their reply.
Last edited by Nate; 11-02-2010 at 10:16 AM.
When it comes to investing you'll find that everyone has an opinion - some have more than one like armpits. ING now owns Sharebuilder and their costs are around $4 per trade. I know several people using it and are satisfied. Rather than buying a book you might consider taking a subscription to Barrons. It comes once a week so you don't get inundated with data. Just think about how many shares of the C fund you could have bought when it was at $8 vs $14.26. The same would be true of the I fund. In March '09 the I fund was selling at $10.29. The point is it will take time to accumulate shares and now that prices are rising it will take even longer to build a serious position. So you have plenty of time to build your TSP. I'm so fortunate that I'm not starting new because this bull market is going to be my salvation. My redemption is years of earned experience and now that I'm retired all the taps are wide open and the dollars are flowing. The Nasdaq 100 index (NDX) is printing higher highs and that can be an indicator that this recovery rally has many more years to run. Snort.
Well I considered your suggestion, and headed off for a simple start at browing through Barnes & noble. Ive got my wife interested in learning, and bluntly, both of us really are not familiar with economics, much less investing. We hit the both isles. Economics has a few good books, including the "for dummies". We decided to only buy 1 book, and went to the investing isle searching for something basic, bang for buck. Decided on a book called "All about stocks" (3rd ed) by Esme' Faerber. Very basic, explaining different types & styles, but concentrating on stock investing.
"The Truth about Money" kinda headed off into financial planning more than I wanted at the moment...myself (& wife) are more interested in learning "why", uncle sam's decisions affect "what" & "how", so that we may be able to benefit & make correct financial decisions the way some of you do.
For now, were reading the book, and Im watching closely at everyones "account talk" posts.
I've learned quite a bit over the last week, thanks for everyones help here, and eager to learn more. Been paying attention to Fox Business...and trying to understand this foreign language they speak .
Most of my family & friends pay 99% less attention to politics, the economy and investments than myself.....at 35, im behind the curve.....but better late than never.
I dont mean to beat a dead post, but Ive had an ongoing confusion with the general TSP lingo used here.
If i understand it correct: my contribution allocation (aka allocation) tracked by the autotracker is my monthly contribution into the TSP fund.
I dont know what term is for what TSP referrs to as my account distribution. I'd assume its distribution.
I ask, because i've gotten alot of recommendations regarding allocations. Do most of you here divide up your "distribution" similar to your allocations? -Or quite differently?
For the record, the education im getting here is passed along to a friend also....a fellow soldier I've known since Basic. Shes had her funds sitting in G for the last 1-1/2 year. Were both looking into some seriously needed TSP classess offered by the Army.
S.E. Cupp has my vote!
S&P 500 (C fund) |
1d 5d 3m 6m 1y 2y
|Dow Completion (S fund) |
|EFA (I fund) |
1d 5d 3m 6m 1y 2y
|Bonds (F fund) |