YoungMind's FantasyTSP Account

[crondanet5]

My dad did the same thing with cd's a century ago. Of course back then the interest rate was 17%. Not knowing the amounts of the cd's or the interest percentage offered, I am wondering if you are happy with the return on investment? Recently I had a 4 figure Fidelity brokerage account lying fallow. They paid me $2.32 for keeping it safe for a month. In 2 days, with a $19.95 commission to purchase, and a $19.95 commission to sell, I gained $100 in account value. Sure beats their $2.32 don't you think? One buy, one sell. Consider this: If you take your entire bundle of cd's and classify them as a low risk category of your overall portfolio the questions that come to mind are do you have an equal amount in a riskier investment, and is this the time in your life to have so much money in a low risk investmnent vehicle or should you be investing to accumulate greater wealth? All the "talkers" urge balanced portfolios and diversification. That's easy when you have 2 million. But if you have $8,334? Is it good to diversify that money so that half of that $8,334 yields a very small amount? I don't think so. I say to myself "I am developing a diversified portfolio, slowly, but right now I'm trying to fill the high risk end of that balanced portfolio before addressing the conservative portion of it." Kind of like an airplane taking off. You don't throttle back until you've reached the correct airspeed and altitude. I treat my portfolio the same way. Perhaps you could do the same with your portfolio, or perhaps you would like to greatly increase that 5 year ladder program monthly cd balances. Also, as federal employee, you do expect to receive a pension don't you? That relieves a great deal of the pressure to have a conservative portfolio and offers the opportunity to develop a meaningful multi-generational wealth fund for future heirs to tap as necessary. Well, what do you think? Does this thread beat the pleasure of completing a Sudoku? There's more if you are interested.

[JayJ]

Oh yeah? You better dig deep into this web site's archives. We tested this situation and it is not pretty. TSP allows one trade into the G Fund after your 2 allowed trades, and that trade through them is 100% G, one time, end of discussion, for the rest of the month. You cannot move 1% into the G today, another 1% into the G tomorrow and so on until the end of the month-- does not work that way. There still is that one glimmer of sunshine I mentioned, but I'm waiting for YoungMind's reply to share that.

Sorry Crondanet, I tried this experiment (last January) and it is like Crashdump says, you CAN incrementally go back to the G Fund (sort of a reverse dollar cost averaging) with 3rd, 4th, 5th etc transactions. Not that it does much good to do that. It would have been so much better, if they were so hell-bent on limiting IFTs, if they would just limit to 26 IFTs per year, rather than 2 per month. Some months need more than 2, other months none at all. Given the 2 trade limit, I do agree with your strategy of trying to enter each month invested, so that you have a second shot at investing later in a month even if you have to use IFT 1 to get out early in the month.

Best wishes all.

[YoungMind]

Your dad was lucky to get 17%, what was the prevailing interest rates at the time? Around 12%? I believe in diversification completely. The cds are returning an average of 5.5% (thats the beauty of investment averaging) and represent approximately 38 % of my portfolio (when not 100% G). The rule of thumb is own your age in bonds (but I dislike bonds and am not 38) and have substituted a federally insured, readily available “cash” alternative. Of course, with rates down now at at 3.5 or so, over the next 5 years that average will change, as will my investment strategies. Its just another way to preserve some value while making it quickly available in case of need. Alternatives include Roths /IRAs & money accounts as well as private investments, of which i also par take. It’s all about personal perception and tolerance for risk acceptance. I like to sleep at night

CD investors beware...that increase in FDIC insurance level is only good for 1 year and will (may) revert back to 100K soon. Best to track your current & projected cd values and spread the money to other banks / credit unions when you near the 100K level if you wish to keep it umm, "safe". Of course there are alternatives, ie, accounts in your spouse’s name, joint accounts. Generally ( *but check your financial institution*) that permits insurance levels up to 300K under the “old” rules.

The thing about money is, you have to put it somewhere. Home ownership is a great option also (good buys now!) as that interest paid can be a good tax shelter. Everyone’s situation is different and their investments should be tailored to reflect their comfort levels as well as their goals.

TSP is just one way to add to a nice retirement. CDs are another... Both are nice compliments to social security (note the reduction of 37% projected starting 2033 or so) and to a fed. retirement. I'm a squirrel and like to save my nuts, but do so in places that I can remember and that are also providing a nice return. Start early... compounding works.

[jeffvan1]

Sorry guys, Crashdump is right. At both this site and the actual TSP site I have executed the following trades:

EFT 1- G to C 100%
EFT 2- C to F 100%
EFT 3 - F to G 20%
EFT 4 - F to G 20%
EFT 5- F to G 60%

All in one month. (after TSPKing implimented the 2 trade rule to follow TSP)

I'm fairly sure You can mix and match in any combo you want. for example: (increase the percentage of the account held in the G Fund by reducing the percentage held in one or more of the other TSP funds)

eft 1 G to C/S/F/I 20%/20%/20%/40%
eft 2 C/S/F/I to C/I 50% / 50%
eft 3 C to G 20% (leaving you C-30% / I-50%)
eft 4 C to G 20%(leaving you C-10% / I-50%)
eft 5 I to G 20% (C-10% / I-40%)
etc, etc, you get the picture....

[jeffvan1]

Personally I would still diversify it. I don't feel the least bit sorry for the Madoff crowd who put all their eggs in one financial basket simply because Bernie was pronmising 40% returns for the rest of their lives. (Adage #1, If it sounds to good to be true, it usually is). Unless I was willing to risk losing all of the $8,334.00 (Futures, puts / calls, roulette, etc) I'm more comfortable with putting the eggs in a couple of baskets.

[crondanet5]

Another strategic weapon of mass wealth accumulation. Does anyone have an idea how best to apply it? 30% per IFT? Two day intervals between IFTs?

[crondanet5]

your experience with multiple IFTs means the story about a participant utilizing multiple IFTs last October could be duplicated the next time things look really bad. I believe he was 100% invested October 1st, then began pulling back until he was completely out the day before the big bang occurred. Perhaps we should examine the weekly and mobthly charts to see how these IFT possibilities might best be used. Interesting.

[mkw52]

okay, so the big question is where to start the month of august? i've done petty good the last month, hanging in through the ups and downs. do i cut the minor losses and retreat, or hang in there? i'm happy with the s fund, but can't help but wonder if the i fund is due...does china tanking mean our i find will take off? or should i just lay low and be happy with recouping proir losses?

[crondanet5]

It's your decision how you place your money. But I have been 20% S and 80%I. Three things: Europe and Asia are still moving along and Europe is used to a higher unemployment figure than the United States so they are not as concerned about loss of consumer consumption. Second, the value of the US dollar will probably sag again when Bernanke testifies before Congress or the treasury debacle ends, whichever comes first. Third, if the "talkers" are correct this time and we pull back to DOW 8,000 the money you have in the I could continue to gain while obviously the S Fund would suffer. And if the I begins to lose as well you could always incrementally retreat to the G. But I suspect any drop in the S would be quick and severe and a large exposure in the S could really take the stuffing out of your account balance. So I'm 20% S Fund, 80% I Fund. That's how I'm playing August.