My Biggest Gripe/Concern With the TSP!
Moderator: Aitrus
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Re: My Biggest Gripe/Concern With the TSP!
Correct. And remember the COLAs do not match up with the impact from inflation because those rascally federal economists revised the formula to calculate inflation. So we are on our own to be sure we have enough money to live comfortably in all the years of our retirement, however long that may be, and how healthy we remain. Dividends can work but it takes a lot of capital to generate sufficient dividends to live on. Most analysts who espouse the idea of dividend investing are looking at an average return of around 3.5%. It takes diligence to make it work.
Re: My Biggest Gripe/Concern With the TSP!
I know there is a rocking chair on a sunny part of the lawn at the old soldiers home with the echos of a grateful nation ringing in my ears, or is that tinnitus?
Re: My Biggest Gripe/Concern With the TSP!
MSR: That is very funny, especially to this retired Vietnam vet.
Seek Wisdom where it can be found.
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Re: My Biggest Gripe/Concern With the TSP!
No time for rocking chairs. BBB check out the dividend yield of HCP. What do you think?
Re: My Biggest Gripe/Concern With the TSP!
Well...a little research goes a long way. Suggest looking up Blackrock Institutional...
"Dividends and Capital Gains
Under the Internal Revenue Code, earnings in the TSP and other similar defined contributions plans (e.g., 401(k) plans) are not taxable income, nor is the tax treatment different for interest, dividends, capital gains, or tax-deferred contributions when money is withdrawn from the plan. Therefore, there is no need to report dividends and capital gains separately for tax-deferred accounts.
BlackRock Institutional Trust Company, N.A, which manages the index funds in which the F, C, S, and I Funds are invested, credits interest and dividend income each business day. This income is then reflected in the TSP share prices.
The daily change in TSP share prices reflects all investment income (interest on short-term investments, dividends, capital gains or losses, and securities lending income) net of TSP administrative expenses."
"Dividends and Capital Gains
Under the Internal Revenue Code, earnings in the TSP and other similar defined contributions plans (e.g., 401(k) plans) are not taxable income, nor is the tax treatment different for interest, dividends, capital gains, or tax-deferred contributions when money is withdrawn from the plan. Therefore, there is no need to report dividends and capital gains separately for tax-deferred accounts.
BlackRock Institutional Trust Company, N.A, which manages the index funds in which the F, C, S, and I Funds are invested, credits interest and dividend income each business day. This income is then reflected in the TSP share prices.
The daily change in TSP share prices reflects all investment income (interest on short-term investments, dividends, capital gains or losses, and securities lending income) net of TSP administrative expenses."
"Liars can figure and figures can lie..."
Ruy
Ruy
Re: My Biggest Gripe/Concern With the TSP!
MSR wrote:I know there is a rocking chair on a sunny part of the lawn at the old soldiers home with the echos of a grateful nation ringing in my ears, or is that tinnitus?
Nice one!
I've always told my wife if I get too old or too ornery to handle just drop me off at The Old Soldiers and Sailors Home with my ID card and let them pamper and take care of me the rest of my way out. Lord knows I paid my dues and met the membership requirements.
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Re: My Biggest Gripe/Concern With the TSP!
Not worth it. The bridge games are horrible.
Re: My Biggest Gripe/Concern With the TSP!
My wife and I were working steadily toward having our 15 year mortgage paid down in 3-1/2 years. We backed off a bit when furloughed last year, but kept up with TSP contributions because I was ptting in specific dollar amount, not percentage. I also had kicked it up to cover a step increase last February. We started putting all the excess in my wife's auto payment when it appeared the budget crisis was laid to rest. However, in looking at my gains over the last few years, it seemed much more fruitful to make the minimum mortgage payments on that 3-1/2% deal and invest all the excess for triple the gain. Was that an incorrect allocation of resources. Retirement it only an early out away. Making the moirtgage payment is no big issue, and we can still invest at the same level, outside of not contributing to TSP any longer, or we can put the excess into the mortgage. Ma and Pa Kettle math aside, of course.
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Re: My Biggest Gripe/Concern With the TSP!
Baitboy, as long as you can get a greater return investing the extra cash in investments than your mortgage rate, you will technically be good to go. However, it's not just the rate. You need to compare the amount you earn per year.
For example:
Mortgage remaining: 100k
Mortgage rate: 3%
Extra cash yearly: 10,000 dollars
1. Calculate the mortgage interest = 3,000 dollars
2. Calculate potential return of 10,000 dollars invested @ 7% = 700 dollars
3. Calculate saved interest next year after reducing mortgage principle:
100k*.03 = 3,000 dollars
90k*.03= 2,700 dollars
You "earn" 400 dollars on your investment. I think I did that right. I'm on Metro and it's just a little crazy right now.
For example:
Mortgage remaining: 100k
Mortgage rate: 3%
Extra cash yearly: 10,000 dollars
1. Calculate the mortgage interest = 3,000 dollars
2. Calculate potential return of 10,000 dollars invested @ 7% = 700 dollars
3. Calculate saved interest next year after reducing mortgage principle:
100k*.03 = 3,000 dollars
90k*.03= 2,700 dollars
You "earn" 400 dollars on your investment. I think I did that right. I'm on Metro and it's just a little crazy right now.
Re: My Biggest Gripe/Concern With the TSP!
BaitBoy wrote:My wife and I were working steadily toward having our 15 year mortgage paid down in 3-1/2 years. We backed off a bit when furloughed last year, but kept up with TSP contributions because I was ptting in specific dollar amount, not percentage. I also had kicked it up to cover a step increase last February. We started putting all the excess in my wife's auto payment when it appeared the budget crisis was laid to rest. However, in looking at my gains over the last few years, it seemed much more fruitful to make the minimum mortgage payments on that 3-1/2% deal and invest all the excess for triple the gain. Was that an incorrect allocation of resources. Retirement it only an early out away. Making the moirtgage payment is no big issue, and we can still invest at the same level, outside of not contributing to TSP any longer, or we can put the excess into the mortgage. Ma and Pa Kettle math aside, of course.
I would never EVER rely on stock market returns in relation to debt.
My number 1 rule is for all debt is to be eliminated (minus mortgage) and until then only contribute 5% of your income to the TSP.
A lot of people won't and don't agree with me but I believe this is the best way for individuals to set themselves up for a stress free retirement.
Re: My Biggest Gripe/Concern With the TSP!
Outside of the mortgage all other debt is going to be eliminated within 2 months.I do have to think in terms of what skiehawk11 said. If the market drops then the excess goes to mortgage retirement. If the market gains significantly then at some point the excess savings in retirement will match the remaining mortgage balance whereupon we can retire the debt and bank that amount, also. Or save for the airboat...
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