Just opened a Vanguard Roth IRA...

[mmmmmbeer]

I have seven years until my minimum retirement age to figure out how it compares to my Roth TSP. Comparing, meaning using a the equivalent Vanguard funds to mimic my Daily Seasonal Strat I'm using. I think that's going to be enough time to really see how it does.

I didn't put a lot of money in there, just enough to open it up and establish it. I'm sort of excited to see how my rates of return are if I follow my daily with it.

Right now I only have $6,497 for a Roth TSP balance, BUT I am now set at 100% Roth TSP for deposits and I'm at max contribution. So... at least $18,500/year will be deposited in there for the next 7 years totaling $129,500. Then of course your looking at compounding interest from now until then with the buildup.

If all works out... the plan is to transfer my entire Roth TSP balance over there immediately upon separation from the fed so my monthly draw is from Traditional only, and my Roth TSP (now IRA) has a chance to continue to grow from 50 - 59.5 when it's acceptable to withdraw any of it without penalty.

[crondanet5]

Sounds like a plan. Check with Vanguard to determine minimum required investment time in their funds. If the funds don't work use ETFs.

[onerepmax]

I think TSP withdrawals are proportionate across traditional and Roth, unless that is part of the new change.

[mmmmmbeer]

I think TSP withdrawals are proportionate across traditional and Roth, unless that is part of the new change.

Yes... if you're going to "withdraw" it's 50/50, BUT a person can transfer just their entire or partial Roth TSP balance only to a Roth IRA that's already been established.

It's also a way to get more than the $5,000 a year maximum into your Roth IRA. So for instance if I have $180k in my Roth TSP balance @ 50, I can transfer that whole $180k to my Roth IRA... thus giving me probably more than I could ever earn on my own in the next 16.5 years until I turn 59.5 just depositing a maximum of $5k a year in there.

[mmmmmbeer]

Monday I'm going to transfer my whole balance in there into Vanguard's VXF to hopefully pick up the small cap upswing for the next 3 weeks.

[fatchance]

Are ETFs better than mutual funds? I bought some Vanguard Small Capitalization Index Fund Investor Shares (NAESX), but I'm not sure if I made the right decision.

[badboy]

I didn't put a lot of money in there, just enough to open it up and establish it. I'm sort of excited to see how my rates of return are if I follow my daily with it.

Can you actually follow a daily with Vanguard? I thought there were waiting periods involved.

[mmmmmbeer]

I didn't put a lot of money in there, just enough to open it up and establish it. I'm sort of excited to see how my rates of return are if I follow my daily with it.

Can you actually follow a daily with Vanguard? I thought there were waiting periods involved.

Well according to this:

https://personal.vanguard.com/us/whatwe ... tionpolicy

It looks like as long as we use Vanguard EFT's it looks like we can?

Frequent-trading policy

If you sell or exchange shares of a Vanguard fund, you will not be permitted to buy or exchange back into the same fund, in the same account, within 30 calendar days. However, this rule does not apply to:

-Vanguard money market and short-term bond funds (with the exception of Vanguard Short-Term Inflation-Protected Securities Index Fund).

-Vanguard ETF® Shares.

Though... if you look at this page:

https://personal.vanguard.com/pdf/r110.pdf?2210112996

There is a limit to EFT trades in a 12 month period, but it looks like that's only if you buy and sell the same Vanguard EFT more than 25 times that year, which I don't believe we even come close:

If you buy and sell the same Vanguard ETF in a Vanguard Brokerage Account more than 25 times in a 12-month period, you may be restricted from purchasing that Vanguard ETF through the account for 60 days.

Also no commission fee from Vanguard when trading Vanguard EFT's:

https://investor.vanguard.com/investing ... ommissions

[mmmmmbeer]

Are ETFs better than mutual funds? I bought some Vanguard Small Capitalization Index Fund Investor Shares (NAESX), but I'm not sure if I made the right decision.

I'm not positive, but if you use Vanguard as your broker, there are no fee's to buy/sell Vanguard ETF's.

[fatchance]

I didn't know about no fees. Thanks, bro!

[onerepmax]

Good to know. Isn't there something else about the Roth IRA being established for at least 5 years?

[ArrieS]

Just a side note. I don't know if you have any taxable investment accounts but at Bank of America, if your three-month account balance is $50,000 or more, you get 30 free trades a month with Merril Lynch.

I used Merril Lynch because of this. I can buy and sell as much as I want.

Also, you may find yourself in trouble. In an IRA account, you may have free riding violation.

"a free riding violation occurs when the investor sells a stock that was purchased with unsettled funds." The Securities and Exchange Commission states "In a cash account, you must pay for the purchase of a stock before you can sell it. If you buy and sell a stock before paying for it, you are free riding, which violates the credit extension provisions of the Federal Reserve Board. If you free ride, your broker must freeze your account for 90 days."

For example, if the seasonal strategy has you sell the S fund, go to G fund for a Day, and then go back to S or I. That would be a violation in your retirement account. Because trades take three days to settle. Technically you haven't received the money from the S fund sale when you bought the G fund, sold that, and then bought the next fund.

IRAs are cash accounts and can't have margin.

[mmmmmbeer]

Hrrmm.. maybe have to modify a daily to have less IFT's and at least 6 days in between... maybe retreating back to a money market or something in between.

[ArrieS]

Hrrmm.. maybe have to modify a daily to have less IFT's and at least 6 days in between.

Not really, just don't do any like what I described. In the above scenario, I would suggest treating cash as the G fund equivalent.

So instead of buying Government bonds fund equivalent, hold it in cash. Just be mindful of times when it has to do a lot of changes in a short period of time. If it will make you go from C to S and then I, just stay in the Vanguard equivalent ETF until it's time to switch to the I fund for example. Bot the C and S is the American stock market so you are still exposed to U.S. stocks.

Don't be afraid to buy and sell on the same day, it's just when you do it a third time within that time frame you are free-riding.

[mmmmmbeer]

Hrrmm.. maybe have to modify a daily to have less IFT's and at least 6 days in between.

Not really, just don't do any like what I described. In the above scenario, I would suggest treating cash as the G fund equivalent.

So instead of buying Government bonds fund equivalent, hold it in cash. Just be mindful of times when it has to do a lot of changes in a short period of time. If it will make you go from C to S and then I, just stay in the Vanguard equivalent ETF until it's time to switch to the I fund for example. Bot the C and S is the American stock market so you are still exposed to U.S. stocks.

Don't be afraid to buy and sell on the same day, it's just when you do it a third time within that time frame you are free-riding.

Ahh.. I get you now. Those weird, 2 days in the I fund, then back to whatevers.