Gut Check Time

[bloobs]

So.....

The retirement investment paradigm of the last 14 years (low/zero interest rates courtesy of the Fed actions that has led to the present extremely overvalued stock funds, real estate, [insert leverageable asset here]) environment....HAS ENDED.

This means, moving forward, our TSPCALC seasonal (and perhaps buy-and-hold) strategies are possibly neutered--since most of these successes were the result of aforementioned easy lending environment.

So what to do now? Just stay in cash accounts (G Fund) earning 3 or more percent?

What are your strategies for this new paradigm? BTW I am assuming that the future may play out like this:

Stage 1: (next 0-2 years) High inflation. Interest rates held steady at 5-6%. Prices remain high, unemployment rises while stocks/crypto/real property crashing until they hit/exceed fair valuations (see Shiller).

Stage 2: (> 2-8 years) Deflation. Prices crash due to uncontrolled demand destruction across the board. Stocks, crypto, real estate steady at or below fair valuations. Unemployment very high. Silver lining: Fed lowers interest rates again.

I'm interested in your personal takes. Per Aitrus, please refrain from blaming Biden/Trump/Obama/Bush Jr./Clinton/Bush daddy,.....,Abe Lincoln, Putin, Napoleon et l. because we geezers here should know by now that the banks and the uber rich folks are the ones really pulling their (and our collective) strings with these situations--and NONE of them could/have ever cared less about us.

But blaming JPowell is fair game

[ripp002]

Age and timeframe still goes. Regarding TSP, it depends on your plan (if your near retirement, do you plan to draw from it monthly?; not touch it after you retire until it's mandatory; transfer it to an IRA/leave it to your family; use it for longterm care. There's many more I'm sure.

As far as seasonals go. They've functioned in dark times, such as 2006-2008. For example, this year, many of the top strats called for allocating to C on the 9th trading day October. So far it's looking positive....The market may drop to lows again...but when your supposed to be in G.

A local credit union has a 15 month 4 percent CD special right now with a 500,000 max (must be new money). Not bad medicine for a good nights sleep.

[bamablue]

I like the idea of parking money in a CD except for the tax hit for money in motion. Don't you have to pay Federal (and maybe State) taxes on the withdrawal and again on the interest income?

[ripp002]

No fees unless it’s for early withdrawal.

Taxes - not on withdrawal, but while earning interest, must be paid annually to the fed and your state (if they collect them).

[Scarfinger]

This means, moving forward, our TSPCALC seasonal (and perhaps buy-and-hold) strategies are possibly neutered--since most of these successes were the result of aforementioned easy lending environment.

So what to do now? Just stay in cash accounts (G Fund) earning 3 or more percent?

Buy and Hold. 10 to 12 years until retirement. I won't need that much of my TSP in retirement.

I am 100% stocks. I did change from 15% Roth and 5% traditional to 10% Roth and 10% traditional to increased my take home pay to deal with higher cost of living so far.

I am maxing out a Roth through Fidelity ($7,000 yr) to increase diversification with US Large Cap Value, US Small Cap Value, International Large Cap Value and International Small Cap Value. I also will be adding some REITs soon.

I am sticking to the only plan that works for me. Do almost nothing and keep accumulating as much as I can.

[Scarfinger]

Interesting pod cast with charts talking about and showing recessions and when they turn around.

by
Evensky & Katz

https://www.youtube.com/watch?v=ocOAb-HyTxo