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Talking stocks, trading, and investing in general

Discussion in 'Business, Careers & Education' started by mikeman, Feb 2, 2011.

  1. stevent

    stevent Senior member

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    KING getting hammered, a little tempting to gamble now
     
  2. Concordia

    Concordia Senior member Dubiously Honored

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    You've finished buying, then?
     
  3. SchwererGustav

    SchwererGustav Senior member

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    I am entering this thread with a lot of questions, and would be most grateful for constructive suggestions and recommendations.

    I will be starting a job with the federal government in two weeks, and am currently completing my on-boarding procedure.

    One item concerns retirement savings and investing:

    Quote: For the Thrift Savings Plan, I have the following options:
    -Keep the contribution at 3% per pay period
    -Contribute an alternate % per pay period
    -Contribute a defined dollar amount per pay period
    -Make no contribution

    The Roth TSP:
    -Contribute a defined percentage amount per pay period
    -Contribute a defined dollar amount per pay period
    -Make no contribution

    I am 30 years old, and this is my first significant job. Additionally, I have no debt or loans to pay off.

    My intent is to reserve one-third of my pay exclusively for investing. Of that, I want to separate 2/3 for a retirement savings plan, and 1/3 for index funds. What resources can I use to help me determine whether to use the TSP or Roth TSP (the latter seems more attractive to me) and in what values? Or should I look elsewhere for other options?
     
  4. Concordia

    Concordia Senior member Dubiously Honored

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    I'm not familiar with these specific plans, but in general the relative merits of the plans depends on your tax status and what you expect it to be. If you expect to have a low-ish retirement income, a conventional IRA-type thing is better. You get deduction against your higher taxes now, and withdraw when you're in a lower bracket. Conversely, if you have a lot of money or expect to down the line, a Roth account is great. You do pay taxes today, but never again. Also, there's no requirement to withdraw when you're alive, so if you plan to leave an estate to your kids it can grow longer under the tax-free umbrella.

    Other things to think about in general are the match from the employer-- if any-- and the investment options. And expenses charged by the available funds. It sounds as though you're just getting bonds in each of these, and if that is true you might want to look for an outside retirement plan if you're eligible to contribute to it. Broadly speaking, you want higher-return assets parked where you can't spend them casually, and most of the time that won't be government bonds. On the other hand, a 100% match can overcome a lot of mediocre investment returns, at least in the shorter term.
     
    Last edited: Aug 12, 2014
  5. jbarwick

    jbarwick Senior member

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    I agree with Concordia in that if you expect to be a a higher tax bracket when you retire then the Roth option is a good idea. A couple of questions you need to answer for us to help a little more:

    -With the 1/3 income being saved, do you want 2/3 of that for retirement specific then 1/3 for some sort of savings for a house or other large relatively soon (<5 years) purchase?
    -What is your risk tolerance? Since you are 30 I assume it is pretty high.

    I follow the Bogleheads mantra of a 3 or 4 asset class retirement plan. I have seen quite a few threads over the with questions from government employees. You will want to get answers in the next couple months before you start having your retirement sitting in bonds.
     
  6. guyver00

    guyver00 Senior member

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    WTF, where is the correction? Just put my VXF order in and then the market popped.
     
  7. Connemara

    Connemara Senior member

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    My employer has a bunch of Vanguard products. Can't beat it. Allocation is small (20%), mid (10%) and large cap (50%) plus a non-Vanguard international index (20%).

    It would be stupid not to have a Roth and Traditional mix. No one can say for certainty what tax rates will look like in 30 years. The CW is "Oh they will skyrocket due to the need to fund entitlement programs," but this doesn't take into account potential actions in the political arena. Who's to say a future Congress and President won't slash entitlements? Or big tax cuts will occur due to years of strong growth?
     
  8. otc

    otc Senior member

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    Yeah. my 401k is all traditional, and my IRA is all roth and I plan to keep contributing to traditional IRAs and rolling them into the roth every year.

    Don't know what I will do if I switch jobs and have to roll the 401k into a traditional IRA (because my current understanding is that that would interfere with making rollovers on the new annual money). I suppose I could always roll it into a new employer's 401k if they offer good plans, but that robs me of the opportunity to take full control of the money.

    That way I have some money in each boat...if taxes change and one ends up better...I've got it. If my situation changes and I end up in different tax brackets...I've got it.

    edit: although I do find it unlikely that taxes will get much *lower* (especially capital gains). They have lots of room to go up...but I think the more likely changes in the future to worry about are changes to the legal status of various retirement vehicles, and unanticipated changes in your own retirement status (e.g. the Roth is great if you expect to be in the same or higher tax bracket when you retire...but what if you aren't?)
     
    Last edited: Aug 13, 2014
  9. SchwererGustav

    SchwererGustav Senior member

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    I lean towards the Roth because I have every intention to make more money in the future. I assume that means I'll be in a higher tax bracket, though I don't want to be mansion-living, multiple-car owning (maybe a motorcycle, though). Am I thinking along the correct line?

    I am not looking for a house in the next five years. I just want to live simply for now, but indulge in some travel before settling down. A friend of mine suggested that my savings be 2/3 in some "secured" savings, and 1/3 in "risk" (the S&P index is what I have in mind). Also, with these combined savings being 33-34% of my total income (a percentage which I chose somewhat randomly), am I being too severe on myself or am I being too optimistic, and should I readjust?

    As for risk tolerance, I took the "Investment Risk Tolerance Quiz at http://njaes.rutgers.edu:8080/money/riskquiz/, and scored a 22, putting me at a "a below-average tolerance for risk" (one point from "average/moderate tolerance".
     
  10. jbarwick

    jbarwick Senior member

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    @SchwererGustav - Bogleheads actually has a setup for the Thrift Savings Plan! (http://www.bogleheads.org/wiki/Thrift_Savings_Plan) Looks like you don't have a large number of options so below would be similar to my setup I use:

    40% - C Fund
    10% - S Fund (These two (C & S) together give you 50% Total Stock Market which is what I try to do)
    20% - I Fund (Or whatever International exposure you feel safe with)
    30% - G Fund - Unique fund where you can never lose your principle

    This gives you a solid portfolio with 70% Stocks, 30% Bonds. I run an 80/20 for a little more risk.

    @otc I rolled over an old 401k into a Trad IRA and was going to do the Trad to Roth rollover later but now you have me a little worried. Looks like I have some more research on that topic but I am not close to starting that.
     
  11. otc

    otc Senior member

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    If you want to roll it all over, you are fine. What I understand from Piob's description, is that you can't just make your 5500 annual traditional IRA contribution and roll it over to a Roth when you already have a sizable traditional IRA (such as from rolling over a 401k). Something to do with how they view all separate IRA accounts as a single quantity...so instead of rolling over just the 5500 (which shouldn't have any significant taxable gains), you end up being forced to roll over a portion of the total IRA (which includes taxable gains).

    To roll everything over...I think you are still fine.
     
  12. SchwererGustav

    SchwererGustav Senior member

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    Thanks @jbarwick , for the TSP break down. It looks like a decent start, though I wonder if it's too much stock.

    What about the Roth TSP? I can contribute to both, and don't know whether I should. Also, any opinions as to whether I should readjust this "one-third of my income" idea and consider outside savings options?

    Also, I'm not familiar with the tradition of this thread, but should I keep posting here, or send you PMs in the future?
     
  13. jbarwick

    jbarwick Senior member

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    Either or it leads to good discussion if people want to add. There are others that pop in from time to time that add a lot of insight.

    You can contribute to both (Trad and Roth) but I think there is a maximum combine contribution. We allocate 20% gross to retirement and will probably raise that a bit but 33% is great...just don't sacrifice having a life for that savings rate. Outside of our retirement savings we have a 6 months emergency fund which is all of our expenses for 6 months since we are dual income. This covers the unlikely event of both of us being unemployed. On top of that 6 months of savings...which if you don't have should come before retirement savings....we have money for home improvements, cars, and that sort of thing we will buy in the future.

    Touching on an emergency fund, read up on what you think yours should be. 6 months is high for some people and low for others who like 12 months but that is a lot of cash just sitting idle not making anything in a checking/savings/money market/CD ladder or whatever you have. We get some sort of 1% bonus on top of our meager 0.65% or whatever our savings rate is if we have an automatic transfer of at least $10 a month.
     
  14. SchwererGustav

    SchwererGustav Senior member

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    I'll keep writing here since I agree that this information could be helpful to other readers.

    As you say about the six month emergency fund, perhaps I'll build that up first. My current savings don't equal what I expect to make in six months. As I meet that goal, I can use the time to better learn about the two plans and others.

    I'll speak with my human resources liaison to see whether I can open these plans later and under what circumstances. Do you reckon this to be wise, or should I still attempt to make some contribution?
     
  15. jbarwick

    jbarwick Senior member

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    I would contribute up to whatever the match is if that is offered since that is "free money" as they say. Then you can save money for an emergency fund. Most of the time, one you are past your probationary period, you can contribute to your retirement anytime. You would just adjust the % on some sort of company website and it will start withdraws in a paycheck or two.
     
  16. SchwererGustav

    SchwererGustav Senior member

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    I would love to treat you to a few drinks, jbarwick. I'm appreciating the insight.

    The only problem is that the more questions I ask, the more I learn of what I don't know - and that leads to more questions. [​IMG]
     
  17. GreenFrog

    GreenFrog Senior member

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    Any of you guys pick up some goodies over the past two weeks?
     
  18. amerikajinda

    amerikajinda Senior member

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    I just picked up some ISTIX yesterday and some other previously-mentioned goodies over the past week... so far I'm up over $500! :happy:

    [​IMG]
     
    Last edited: Aug 14, 2014
  19. tropics

    tropics Senior member

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    nice day for forum favourite EPZM.
     
    2 people like this.
  20. stevent

    stevent Senior member

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    Sold it today, will get back in when it dips again

    Been doing that with gwph too, easy 10% every few days
     

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