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Thread: So I made my 2nd IFT....

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    Question So I made my 2nd IFT....

    This is my first post with any financial reference.
    Im in the Army and upon signing up, my money went automatically into the G fund where I made no changes. It made me $1.60 my first statement. I wasnt impressed and wondered why I didnt just open a savings account.
    I was scheduled to head for Iraq, reviewed the TSP funds, looked for high-risk with high up/down fluctuations. Went 100% IFT from G into the I fund. During the deployment, it did what I expected. Fluctuated. I bought in between Oct & Dec 2009. I fund shares then were around mid 17's-18's. (Im guessing these numbers represent dollar amounts per share .)
    Currently, I funds are sitting at mid 19's. My latest statement says im up a couple hundred $'s/or like 7%. (I've currently only got like $1600 in TSP)
    I funds havent been much into the 20's since 2005 (or 07, i forget), so i decided to pull 100% out and put it back into the G fund temporarily.
    My thinking is over the next few months the I fund will fall again, probably back into the 17's or 18's....maybe lower. When it does, I can pull back out of the G, and buy back into the I fund while its down.
    The reason for this post. Im no investor. Was this IFT a correct logic? Is this how money is made, or am I just way off? Im curious to hear peoples thoughts on whether I made a "normal" transaction/decision?


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    Default Re: So I made my 2nd IFT....

    You can use your monthly contribution to dollar cost average into the I fund allowing you to accumulate shares in either direction. If the I fund goes back to $17 you buy down monthly until you reach that level - but it may go up instead and you still buy only you'll accumulate fewer shares. My rule has always been - learn before you churn. The market arena takes no prisoners - but DCAing does allow you to hedge. You'll have to work many years to build a base that will allow you to make money - so study as you go and learn.

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    Default Re: So I made my 2nd IFT....

    Dollar cost averaging is a good plan, as Birchtree says, but it works best with a buy and hold strategy, not a market timing strategy.

    Timing the market is difficult, even for those who watch things closely. I would say to either buy and hold with DCA until you have time to learn a little more and time to follow your account more closely. Or follow someone (like a member on the autotracker), follow a system, or follow a service, and follow them verbatim - meaning do not deviate.

    At some point you may understand more and you can start to manage your own account.

    Good luck!

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    Default Re: So I made my 2nd IFT....

    A Life cycle fund is an option for those who'd rather let it run on autopilot. I'd think L2040 would be your best bet based on your age.

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    Default Re: So I made my 2nd IFT....

    DCA is basically what I was initially doing, isnt it? A monthly set amount regularly into a partucular fund.....only deviation was the time table. I didnt have a set time table, as I didnt have a plan.

    The G fund was autopilot by default upon entry to the TSP until I physically made a change. My choice to enter the I fund was solely on the decision to take a risk and maybe make some money....even of only very little. I admittingly have only as much of a clue as the concept of buy low, sell high, resulting in my decision to currently move out of the I fund.
    Seems to me I bought low at 17-18, and sold high at 19. Am I incorrect?
    I understand I need some sort of formal education regarding this.
    Being someone that doesnt pay attention to the market, I didnt see myself as trying to time the market for tomorrow, as much as just observe trends over the past. Yes it could go up more, but if im ahead already.......
    I guess I was just looking for someone to say yes, you made a profit. Quit playing around & learn before you attempt this again. lol
    I thought the Army was king of the acronyms....I have to reference wikipedia to decipher what you guys are talking about

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    Default Re: So I made my 2nd IFT....

    If you want to play without penalty think about opening a Roth IRA and buy some individual stocks. Any moves within a Roth don't require any IRS paperwork and you can get free dividend reinvestment four times a year. This may offer more flexibility as well as excitement. You'll be surprised how fast a Roth can grow and how fast some stocks can move. The Roth presents more opportunity as well as risk.

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    Default Re: So I made my 2nd IFT....

    Quote Originally Posted by turbo23dog View Post
    A Life cycle fund is an option for those who'd rather let it run on autopilot. I'd think L2040 would be your best bet based on your age.
    L funds go against the mantra of this board.....unless it is a temporary "haven" for allocation stance in a manner that assists greatest returns.....L funds on autopilot may be nice, but it's still buy & hold!
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    Default Re: So I made my 2nd IFT....

    One last thing...(sorry to hog the topic) I was going to save this for a correct thread. I signed into the TSP by the advice given to a group of soldiers during a financial brief....one of the hundreds of briefs we go through. Like the other ones, the person giving it gave the impression "youre stupid if you dont do it". They just neglected to give the full information (as many briefs) and did not inform the room that this was basically a government 401, and that early withdrawl has a 10-20% penalty. It was told to us that it is much smarter than a savings account, as it returns a profit. Thats it. Yes, they were correct. But did not give the full information that this is meant to be a retirement plan.
    Stating this, im not sure what the future holds, if I will be picked up by the federal government after my military contract. Im not sure of many things. Not sure if I leave federal service, I can keep my money in the TSP to sit...not sure if I can continue to contribute....not sure if I will roll it over into something civilian ie: roth or 401. Initially, I only signed on under the impression it was stupid not to, and better than a savings plan. If I decide to go work for say, state level government & need to access this money after my military contract is over to help pay for a move between jobs, or whatever somes up, I will take a significant hit. Not telling you all this looking for a response, but turbo mentioned the L fund according to my age. I'd like to say that since I finally got myself into a retirement plan, (even though unexpectedly) I should stick with it. All the suggestions and help you guys give on this site is great, and I wish I had come across this sooner. Most military folk in the TSP Ive talked to have no clue what theyre doing either.

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    Default Re: So I made my 2nd IFT....

    Well shucks, my friends do let friends buy and hold - so there.

    Nate,

    Here are some of my DCA purchases of BP Oil. This will demonstrate the strategy. My first purchase during turmoil was at $45.46 a little early and then $36.99, $31.66, $29.91, $29.73, $27.86, looking for the bottom, $33.14, $36.02, $37.01, $38.01, $39.48, $40.16, $41.05, $38.32, $42.00 and I'll be buying all the way to $60.00. I currently have a nice profit but one had to be a fool to go near this stock. They will restart their dividend in the Spring. It was a contrarian play that has worked fine - but it did take some courage to follow this puppy all the way down to $26.00. I've been doing the same strategy with MEE (Massey Energy) a coal company.


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    Default Re: So I made my 2nd IFT....

    Quote Originally Posted by Nate View Post
    Most military folk in the TSP Ive talked to have no clue what theyre doing either.
    The important thing is to invest in your future.
    TSP is a 401(g) which is 99.999999% the same thing as a 401(k). They are investment engines that have deferred tax status for IRS accounting.
    No matter what your status is, a 401(g) will sit there as long as you like. If you convert to a civilian, you can convert it to your employer's 401(k) plan with no fees.
    Now, if you are going to be lazy and not forget about your 401(g) then leave it until you retire in whatever fund you like. But if you are ACTIVELY caring for your nest egg and can move it to a 401(k) that you can actively trade/grow in your best interests, then do that.

    THERE ARE NO PENALTIES FOR TRANSFERRING TO A 401K!!!!

    However, the other transfers (ROTH IRA or into your pocket) come with penalties.

    Hopefully this helps! and tsp.gov has a great handbook covering all the scenarios that can occur with your life and the status of your account!

    (Birch-B&H is also a fine way to invest)
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    Default Re: So I made my 2nd IFT....

    You should also mention how cost effective the TSP plan is and the military does not offer any matching. However, on any deployment the amount for contribution can reach $44K rather than $16,500. And for those lucky enough to be 50 years old there is another $5.5K available for contribution. It's a long term plan that gains in value as a money maker when the balances grow - just think how much a person can make if you own 40,000 shares of a fund - my friend that's $40K a point. Now you're talking money to be made for retirement and it's very cost effective. It just takes many years of time in grade to get to this level.

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    Smile Re: So I made my 2nd IFT....

    Nate,

    Your TSP account is 'transferable'. You will have the right to keep with the Federal brokerage (actaully Blackrock) or move it (all or part) to a new employers 401(k) or a self directed Traditional IRA. The only caveat is that you can only make the move after you quit your current employment.

    The Good:
    Any assets in your 401(k) [TSP] are yours. You can actually see how much mulla you have in the account. As you gain experience you can calculate how much you will be able to pull out of it during your golden years. NO politician can jigger formulas and change anything in the account. It is Al Gores 'lock box' - yuk, yuk...

    The Bad:
    While in the military you get no free match. Civilian slugs like myself get a 100% match to 5% of our salary contributed into the account. In other words, if I contribute 5% of my salary to my account my employer (the Federal Gubmint) dumps the same amount in. It is a good deal. We get it because the governemnt pension portion of our retirement is kinda crappy nowadays. Most employers no longer provide a pension. Thus, wheter you stay in the Army or join the '5th Civ Div' you will have some retirement assets.

    The Ugly:
    It is very expensive and very dumb to pull 401(k) assets out of the accout before retirement age. You can draw a loan - and that is ok. But, you should not yank out the money when you quit your job. Move the money to the new employers 401(k) - or, better yet to a self-directed 401(k).

    Finally, I would recommend books by Ric Edelman and Ray Lucia. Both have very good radio shows as well. Edelman's is a two hour weekend show. Strongly recommended.
    Lookin' up at the 'G Fund'!!!

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