Please look over my investment plan

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Please look over my investment plan

Postby oleblue » Mon Mar 12, 2012 7:32 pm

I am 29 years old. I'm an E-6 active duty military. I have 10 years left till retirement. Single no kids.
State of residence MS. 25% tax bracket

My yearly salary before taxes is $55,000.
I currently have around $105,000 invested as follows and invest $28000 annually also as follows:

Thrift Savings Plan L2040 Fund $63,000 Adding $17,900 annually
Vanguard S&P 500 VFINX $6800 Adding $3600 annually
Vanguard TR 2045 Roth IRA $30000 Adding $5000 annually
Individual stocks that I bought cheap in 2008. $5000 no automatic monthly investment

My TSP fund is invested
39% S&P 500 equivilent TSP name is C fund
22% international stock index or I fund
16% small cap stock index or S fund
12% government securities or G fund
9% fixed income index or F fund

Vanguard Roth is invested as follows
62% Vanguard Total Stock Market Index Fund Investor Shares
27% Vanguard Total International Stock Index Fund Investor Shares
10%Vanguard Total Bond Market II Index Fund Investor Shares


I also have $10,000 coming from a bonus this year and would like to invest it wisely somewhere.

I have 6 months expenses for my emergency fund. I rent an apartment. I don't have any debt, only utility bills and insurance.
My vehicles are paid for an in good working condition. After investing and bills, I have around $700 left over every month.I have a reasonably high risk tolerance. My plans are to retire when I'm 55 if possible.


Could someone would look over my investments and make sure I am making the right choices in investing for my age?
I also see that the TSP has a roth option now. Would that be something I should look into?
Should I invest in different individual index funds also other than the s&p 500 I already have? Total stock market, international?

Thanks so much for your help.


Thanks for your help.
Last edited by oleblue on Mon Mar 12, 2012 9:04 pm, edited 3 times in total.
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Re: Please look over my investment plan

Postby nirvines88 » Mon Mar 12, 2012 8:06 pm

oleblue wrote:My yearly salary before taxes is $55,000.

oleblue wrote:I also see that the TSP has a roth option now. Would that be something I should look into?


It looks like you're pretty solidly in the 25% tax bracket range, yes? If that's the case, it's hard to say. At the 25% level, it is difficult to tell whether a Roth option or a Traditional option is better. Typically under 25% means that a Roth option may be better, whereas over 25% a Traditional option is better. For you, Traditional may be better, or maybe a mixture of Traditional and Roth. I would lean towards solely Traditional or a mix of Traditional and Roth. Check out this link: http://thefinancebuff.com/case-against-roth-401k.html

I just thought about this though: You're a member of the military, which means you get a pension after x years of service, correct? If you have a pension, your tax bracket may never be lower than it is now (or possibly just barely lower). In that case, a Roth may be a better choice. Hopefully others can weigh in on the pension factor (before I thought about this, I was definitely thinking a Traditional option was the better choice).

oleblue wrote:I currently have around $105,000 invested as follows and invest $28000 annually also as follows


Impressive! Great savings rate.

oleblue wrote:Thrift Savings Plan L2040 Fund $63,000 Adding $17,900 annually
Vanguard S&P 500 VFINX $6800 Adding $3600 annually
Vanguard TR 2045 Roth IRA $30000 Adding $5000 annually
Individual stocks that I bought cheap in 2008. $5000 no automatic monthly investment


I don't know much about the TSP, but you have some good Vanguard funds there. Bogleheads typically do not condone buying individual stocks, and most people will probably recommend that you sell them. I would suggest holding on to them if they have significant capital gains, and stop buying individual stocks in the future and redirect that money towards index funds, preferably one of the big 3 index funds: Total Stock Market, Total International, or Total Bond (T.B. is best placed in a tax deferred account).

oleblue wrote:I also have $10,000 coming from a bonus this year and would like to invest it wisely somewhere.


Once again, I think one of the big 3 index funds would serve you well. See this link for more info: viewtopic.php?f=10&t=88005

oleblue wrote:Could someone would look over my investments and make sure I am making the right choices in investing for my age?


I personally think that you are doing great. You're saving a lot of your salary at a young age and investing it wisely. A few minor tweaks may be beneficial (such as redirecting contributions away from individual stocks towards mutual funds, using the big 3 portfolio instead of the target retirement fund as it would allow for easier rebalancing, etc.).

It sounds cliche, but thanks for serving! Let us know if you have any further questions. Hopefully others will weigh in on the Roth v. Traditional option.
"Beware of little expenses, a small leak will sink a great ship" - Poor Richard
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Re: Please look over my investment plan

Postby cubaboymatt1316 » Mon Mar 12, 2012 8:24 pm

As a former NCO in the Army, I have to say... I'm impressed! Your savings rate is excellent. We're the same age, and while I have a wife and kids, I'm still not sure I'd be saving as much as you if I didn't! I know how hard it is to not drive the fancy cars other E6's drive around (and spend their entire paychecks on) or eat out every night. You are going to be extremely comfortable in 10 years. I'm jealous!
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Re: Please look over my investment plan

Postby joe8d » Mon Mar 12, 2012 8:39 pm

Thrift Savings Plan L2040 Fund Adding $17,900 annually
Vanguard TR 2045 Roth IRA Adding $5000 annually


On a 55K salary, the TSP Tradition contribution is probably dropping your income down to the 15 % bracket and so the Roth is being done in the 15% bracket.That's the way to go normally. I did similar with maxing my 401K to drop my bracket down and then did the Roth in the lower bracket.

Having a Military pension in the future though, may require some additional considerations.
All the Best, | Joe
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Re: Please look over my investment plan

Postby oleblue » Mon Mar 12, 2012 8:58 pm

nirvines88 wrote:
oleblue wrote:My yearly salary before taxes is $55,000.

oleblue wrote:I also see that the TSP has a roth option now. Would that be something I should look into?


It looks like you're pretty solidly in the 25% tax bracket range, yes? If that's the case, it's hard to say. At the 25% level, it is difficult to tell whether a Roth option or a Traditional option is better. Typically under 25% means that a Roth option may be better, whereas over 25% a Traditional option is better. For you, Traditional may be better, or maybe a mixture of Traditional and Roth. I would lean towards solely Traditional or a mix of Traditional and Roth. Check out this link: http://thefinancebuff.com/case-against-roth-401k.html

I just thought about this though: You're a member of the military, which means you get a pension after x years of service, correct? If you have a pension, your tax bracket may never be lower than it is now (or possibly just barely lower). In that case, a Roth may be a better choice. Hopefully others can weigh in on the pension factor (before I thought about this, I was definitely thinking a Traditional option was the better choice).

oleblue wrote:I currently have around $105,000 invested as follows and invest $28000 annually also as follows


Impressive! Great savings rate.

oleblue wrote:Thrift Savings Plan L2040 Fund $63,000 Adding $17,900 annually
Vanguard S&P 500 VFINX $6800 Adding $3600 annually
Vanguard TR 2045 Roth IRA $30000 Adding $5000 annually
Individual stocks that I bought cheap in 2008. $5000 no automatic monthly investment


I don't know much about the TSP, but you have some good Vanguard funds there. Bogleheads typically do not condone buying individual stocks, and most people will probably recommend that you sell them. I would suggest holding on to them if they have significant capital gains, and stop buying individual stocks in the future and redirect that money towards index funds, preferably one of the big 3 index funds: Total Stock Market, Total International, or Total Bond (T.B. is best placed in a tax deferred account).

oleblue wrote:I also have $10,000 coming from a bonus this year and would like to invest it wisely somewhere.


Once again, I think one of the big 3 index funds would serve you well. See this link for more info: viewtopic.php?f=10&t=88005

oleblue wrote:Could someone would look over my investments and make sure I am making the right choices in investing for my age?


I personally think that you are doing great. You're saving a lot of your salary at a young age and investing it wisely. A few minor tweaks may be beneficial (such as redirecting contributions away from individual stocks towards mutual funds, using the big 3 portfolio instead of the target retirement fund as it would allow for easier rebalancing, etc.).

It sounds cliche, but thanks for serving! Let us know if you have any further questions. Hopefully others will weigh in on the Roth v. Traditional option.


Yes I am in the 25% tax bracket. I will check out the link you posted.

Yes I will get a pension after I retire at 20 years. Not sure how much without factoring everything in $1500- 2000 roughly I would guess.

My TSP fund is invested
39% S&P 500 equivilent TSP name is C fund
22% international stock index or I fund
16% small cap stock index or S fund
12% government securities or G fund
9% fixed income index or F fund

Vanguard Roth is invested as follows
62% Vanguard Total Stock Market Index Fund Investor Shares
27% Vanguard Total International Stock Index Fund Investor Shares
10%Vanguard Total Bond Market II Index Fund Investor Shares

cubaboymatt1316 wrote:As a former NCO in the Army, I have to say... I'm impressed! Your savings rate is excellent. We're the same age, and while I have a wife and kids, I'm still not sure I'd be saving as much as you if I didn't! I know how hard it is to not drive the fancy cars other E6's drive around (and spend their entire paychecks on) or eat out every night. You are going to be extremely comfortable in 10 years. I'm jealous!


I appreciate it.
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Re: Please look over my investment plan

Postby oleblue » Tue Mar 13, 2012 5:24 pm

joe8d wrote:
Thrift Savings Plan L2040 Fund Adding $17,900 annually
Vanguard TR 2045 Roth IRA Adding $5000 annually


On a 55K salary, the TSP Tradition contribution is probably dropping your income down to the 15 % bracket and so the Roth is being done in the 15% bracket.That's the way to go normally. I did similar with maxing my 401K to drop my bracket down and then did the Roth in the lower bracket.

Having a Military pension in the future though, may require some additional considerations.


I'm not well versed on taxes but I went over my last year of pay stubs and I paid $2500 last year in federal taxes. $1200 of which I got back in a refund.
I paid $500 in state taxes and got back $200
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Re: Please look over my investment plan

Postby oleblue » Wed Mar 14, 2012 8:34 am

Any other recommendations? My tsp is maxed and my roth is maxed out. Should I take the bonus and put it in my s&p 500 fund or should I open another fund ( total stock market) or such and put the money in there?
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Re: Please look over my investment plan

Postby dickenjb » Wed Mar 14, 2012 8:45 am

You may want to consider putting the $10000 in taxable into Total International. That way you will get the Foreign Tax Credit.

You have enough assets now that if you can handle the complexity of a 3 fund portfolio you will see some tax advantages from holding the three funds Total Stock, Total Bond, and Total International. See the Wiki re: 3 fund portfolio and Tax Efficient Asset Location. Conventional wisdom suggests when you start to save outside of TSP and Roth that you break up your holdings such that all bonds are in tax advantaged, all International in taxable, and Domestic Equity in remaining space.

http://www.bogleheads.org/wiki/Principl ... _Placement

http://www.bogleheads.org/wiki/Lazy_Por ... portfolios
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Re: Please look over my investment plan

Postby retiredjg » Wed Mar 14, 2012 11:19 am

oleblue wrote:Any other recommendations? My tsp is maxed and my roth is maxed out. Should I take the bonus and put it in my s&p 500 fund or should I open another fund ( total stock market) or such and put the money in there?


oleblue, since your taxable account is now a significant portion of your portfolio, it's time to stop using the target type funds (because target funds should not be in your taxable account because they contain bonds). What you need to do now is use the building blocks for the target funds (instead of the target funds) and distribute the building blocks according to where they best fit.

Here is what you have now (total = $114,800) :

    Taxable
    $10k to be invested
    $6.8k Vanguard S&P 500 VFINX
    $5k Individual Stocks

    TSP
    $63k L2040 Fund

    Roth IRA
    $30k Vanguard TR 2045 Roth IRA


Here is one idea to consider. You would change your current holdings to this below and then maintain it with contributions.

    Taxable
    $10k Total International Index VGTSX
    $6.8k Vanguard S&P 500 VFINX
    $5k Individual Stocks

    TSP $63
    $28.3k C Fund (500 Index)
    $11.7k S Fund (Completion Index)
    $23k F Fund or G Fund or combination

    Roth IRA $30k
    $13k Total Stock Market (could add a tilt here - like some REIT - if you want)
    $17K Total International Index

This idea is 80% stocks, 20% bonds, with 30% of stocks (24% of portfolio) in International stocks. This is "better" than your current approach in two ways. First, it maintains your stock to bond ratio even when you are adding money to the taxable account (where bonds should not be, if possible). Second, it replaces the I Fund with Vanguard's International fund. The I Fund is incomplete in that it does not contain the emerging markets portion of the international market. And the I fund also does not contain small cap stocks. So replacing the I Fund with the Vanguard fund makes your portfolio more complete and more diversified.

How to figure C Fund and S Fund ratio. The C fund is the same as the 500 index you are holding in your taxable account.

    75% of the 500 Index and C Fund together plus 25% of the S fund = total stock market

Or if you want to overweight mid and small caps, just do half C fund/500 index and half S fund

Contributions = $26,500 total
Taxable Account $3600 <--to Total International
Thrift Savings Plan $17,900 <--$5300 to bonds, split the rest about 75% C fund and 25% S Fund
Roth IRA $ $5000 <--$2,800 to International, rest to total stock (or a tilt if you want)

Let me know if you have any questions.
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Re: Please look over my investment plan

Postby savesenuff » Wed Mar 14, 2012 11:52 am

Here is an article, also by “The Finance Buff,” that may lead you to the TSP Roth instead of the traditional TSP.

http://thefinancebuff.com/most-tsp-part ... h-tsp.html
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Re: Please look over my investment plan

Postby oleblue » Wed Mar 14, 2012 6:08 pm

retiredjg wrote:
oleblue wrote:Any other recommendations? My tsp is maxed and my roth is maxed out. Should I take the bonus and put it in my s&p 500 fund or should I open another fund ( total stock market) or such and put the money in there?


oleblue, since your taxable account is now a significant portion of your portfolio, it's time to stop using the target type funds (because target funds should not be in your taxable account because they contain bonds). What you need to do now is use the building blocks for the target funds (instead of the target funds) and distribute the building blocks according to where they best fit.

Here is what you have now (total = $114,800) :

    Taxable
    $10k to be invested
    $6.8k Vanguard S&P 500 VFINX
    $5k Individual Stocks

    TSP
    $63k L2040 Fund

    Roth IRA
    $30k Vanguard TR 2045 Roth IRA


Here is one idea to consider. You would change your current holdings to this below and then maintain it with contributions.

    Taxable
    $10k Total International Index VGTSX
    $6.8k Vanguard S&P 500 VFINX
    $5k Individual Stocks

    TSP $63
    $28.3k C Fund (500 Index)
    $11.7k S Fund (Completion Index)
    $23k F Fund or G Fund or combination

    Roth IRA $30k
    $13k Total Stock Market (could add a tilt here - like some REIT - if you want)
    $17K Total International Index

This idea is 80% stocks, 20% bonds, with 30% of stocks (24% of portfolio) in International stocks. This is "better" than your current approach in two ways. First, it maintains your stock to bond ratio even when you are adding money to the taxable account (where bonds should not be, if possible). Second, it replaces the I Fund with Vanguard's International fund. The I Fund is incomplete in that it does not contain the emerging markets portion of the international market. And the I fund also does not contain small cap stocks. So replacing the I Fund with the Vanguard fund makes your portfolio more complete and more diversified.

How to figure C Fund and S Fund ratio. The C fund is the same as the 500 index you are holding in your taxable account.

    75% of the 500 Index and C Fund together plus 25% of the S fund = total stock market

Or if you want to overweight mid and small caps, just do half C fund/500 index and half S fund

Contributions = $26,500 total
Taxable Account $3600 <--to Total International
Thrift Savings Plan $17,900 <--$5300 to bonds, split the rest about 75% C fund and 25% S Fund
Roth IRA $ $5000 <--$2,800 to International, rest to total stock (or a tilt if you want)

Let me know if you have any questions.


Thank you so much for going through all that for me. That's exactly what I needed was someone to break it down for me. I am still learning about all this stuff so I am trusting you with my future. :sharebeer I'll take your advice and move my money around, you know way more than I ever will about any of this and that's exactly why I love this forum. I do have a few questions though.

For my Roth you suggested total stock market and total international index. Is this the (VTSMX) and the (VGTSX) funds?

As far as contributing to each of the funds, are you saying for my taxable accounts to contribute 3600 annually to the total international and not add any more contributions to the other two ( VFINX and individual stocks) ?

For the TSP contributions 5300 to F fund or F/G fund combo?

I may think of a few more once I start moving everything around. Thanks again retiredjg.
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Re: Please look over my investment plan

Postby retiredjg » Wed Mar 14, 2012 7:17 pm

oleblue wrote: I am still learning about all this stuff so I am trusting you with my future. :sharebeer I'll take your advice and move my money around...

You should not do this unless you understand it and decide for yourself that it is a good idea and what you want to do.

For my Roth you suggested total stock market and total international index. Is this the (VTSMX) and the (VGTSX) funds?

Yes, unless you are buying more than $10k worth. Then you should be directed to the ticker for admiral shares of the same funds.

As far as contributing to each of the funds, are you saying for my taxable accounts to contribute 3600 annually to the total international and not add any more contributions to the other two ( VFINX and individual stocks) ?

Yes. You will be buying more 500 Index in the TSP in the form of C fund. You said you were not buying more individual stocks, so I didn't put any money there. If you wanted to buy a little, you could.

For the TSP contributions 5300 to F fund or F/G fund combo?

Yes.

While you are thinking about this, go take a look at what is in the Target Retirement Fund that you currently hold. I've simply used the same funds. Or in the case of total stock market, I've built a total stock market substitute using C fund/500 Index and the S Fund.
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Re: Please look over my investment plan

Postby oleblue » Wed Mar 14, 2012 7:28 pm

retiredjg wrote:
oleblue wrote: I am still learning about all this stuff so I am trusting you with my future. :sharebeer I'll take your advice and move my money around...

You should not do this unless you understand it and decide for yourself that it is a good idea and what you want to do.

For my Roth you suggested total stock market and total international index. Is this the (VTSMX) and the (VGTSX) funds?

Yes, unless you are buying more than $10k worth. Then you should be directed to the ticker for admiral shares of the same funds.

As far as contributing to each of the funds, are you saying for my taxable accounts to contribute 3600 annually to the total international and not add any more contributions to the other two ( VFINX and individual stocks) ?

Yes. You will be buying more 500 Index in the TSP in the form of C fund. You said you were not buying more individual stocks, so I didn't put any money there. If you wanted to buy a little, you could.

For the TSP contributions 5300 to F fund or F/G fund combo?

Yes.

While you are thinking about this, go take a look at what is in the Target Retirement Fund that you currently hold. I've simply used the same funds. Or in the case of total stock market, I've built a total stock market substitute using C fund/500 Index and the S Fund.



I understand the investing concepts for the most part. And now that you laid it out I can understand even better why you did it the way you did. As a respected member on this board I do really appreciate your advice. I don't think you would steer me in the wrong direction. I may have been fine with what I had I just wanted to tweak it and make sure I'm getting the most bang for my buck.

How often should I revisit this plan you have laid out?

1 year? 5 years?

I'm not a day trader, I just want a portfolio I can automatically invest in and kind of put on autopilot. I understand that I will have to shift more towards bonds and less towards stocks the closer I get to retirement?

What kind of time frame would you recommend me to do this?

What's your take on converting my tsp account to roth and adding the $17900 annually? The roth I have through vanguard, would I just change that into a taxable account?

Thank you so much for your help.
Last edited by oleblue on Wed Mar 14, 2012 7:50 pm, edited 1 time in total.
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Re: Please look over my investment plan

Postby retiredjg » Wed Mar 14, 2012 7:48 pm

Once a year should be often enough. But why don't you keep an eye on things for a few months just to see how percentages move up and down all the time?

If you start at 56% US stock, 24% international stock, and 20% bonds and if you split up your annual contributions to the same percentages, it portfolio should stay pretty close to target.

As for moving to more bonds, it is your preference. Maybe you could add 5% bonds every 5 years?
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Re: Please look over my investment plan

Postby oleblue » Wed Mar 14, 2012 8:07 pm

Ok I understand that.

What's your take on converting my tsp account to roth and adding the $17900 annually? The roth I have through vanguard, would I just change that into a taxable account?
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Re: Please look over my investment plan

Postby kd2008 » Wed Mar 14, 2012 8:18 pm

Please read http://thefinancebuff.com/most-tsp-part ... h-tsp.html

In that post, TFB argues that,

Members of the military get a pension only if they stay in the military for 20 years. For those who will stay long enough to get the pension, the case for the Roth TSP would be the same as the one for civilian employees.
Military members who don’t stay 20 years won’t get a pension. I would still do the Roth TSP because the income in the military isn’t that high. After leaving the military, you will likely get a job in the private sector that pays much more. It makes sense to do the Roth TSP now when your tax rate is low.
With some exceptions, most TSP participants should switch to the Roth TSP.
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Re: Please look over my investment plan

Postby retiredjg » Wed Mar 14, 2012 9:12 pm

oleblue wrote:The roth I have through vanguard, would I just change that into a taxable account?

No. You can't change a Roth IRA into a taxable account. And you would not want to. In a taxable account, the earnings will be taxed. In the Roth IRA, your earnings will not be taxed (under current law).

What's your take on converting my tsp account to roth and adding the $17900 annually?

I am not particularly in favor. I think it is likely that Roth TSP (pay tax now, no tax later) will work out the same for you as traditional TSP (no tax now, pay tax later). So Roth TSP is probably not a bad idea. But it is not necessarily a better idea either.

If you convert what you have to Roth RSP, it will cost you a lot in taxes now (almost $16,000). So I would not do that. If you want to put part of your new contributions into Roth TSP, that might be OK. I certainly would not put all of your new contributions into Roth TSP. But that's just me.
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Re: Please look over my investment plan

Postby oleblue » Wed Mar 14, 2012 9:42 pm

Ok I understand. That makes sense. Thank you so much for your help retiredjg.
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Re: Please look over my investment plan

Postby oleblue » Mon Mar 19, 2012 9:21 pm

Well I updated my investment plan as follows, hopefully I'm on the right track now. I will revisit the plan every year or so.

Taxable
$10k Total International Index VGTSX $300 monthly contribution
$6.8k Vanguard S&P 500 VFINX $100 monthly contribution
$5k Individual Stocks

TSP $63
$28.3k C Fund (500 Index) $715 monthly contribution
$11.7k S Fund (Completion Index) $240 monthly contribution
$23k F Fund or G Fund or combination $440 monthly contribution to F fund Split the $23000 between the two

Roth IRA $30k
$13k Total Stock Market $183 monthly contribution
$17K Total International Index $233 monthly contribution which equals the max $5000 a year split between both funds.
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Re: Please look over my investment plan

Postby oleblue » Thu Mar 22, 2012 9:55 pm

Anybody have any input on the final plan?
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Re: Please look over my investment plan

Postby retiredjg » Sat Mar 24, 2012 11:26 am

oleblue wrote:Anybody have any input on the final plan?

The numbers are a little different, but certainly close enough. The numbers may be somewhat different because you are talking about monthly contributions when you actually get paid 26 times a year rather than 24 times a year.

Since this is a pretty big change from using target type funds, you should watch it once a month for awhile just to get used to the ups and downs. You won't necessarily need to do anything, just watch and figure out the percentages for practice.

Once you are accustomed to it, check once or twice a year to see if you need to bring things closer to target. You can do this by changing your contributions a little or by making adjustments in the TSP or in the Roth IRA. Sell stocks and buy bonds (or vice versa) in the TSP to adjust your stock to bond ratio. Sell and buy in the Roth IRA to adjust your US to International stock ratio (this does not need adjusting as often).
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Re: Please look over my investment plan

Postby Dude2 » Sun Mar 25, 2012 9:44 am

Just guessing, but you've got to be Air Force -- am I right? I think you have it all together, and I'm impressed.
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Re: Please look over my investment plan

Postby oleblue » Sun Mar 25, 2012 6:27 pm

retiredjg wrote:
oleblue wrote:Anybody have any input on the final plan?

The numbers are a little different, but certainly close enough. The numbers may be somewhat different because you are talking about monthly contributions when you actually get paid 26 times a year rather than 24 times a year.

Since this is a pretty big change from using target type funds, you should watch it once a month for awhile just to get used to the ups and downs. You won't necessarily need to do anything, just watch and figure out the percentages for practice.

Once you are accustomed to it, check once or twice a year to see if you need to bring things closer to target. You can do this by changing your contributions a little or by making adjustments in the TSP or in the Roth IRA. Sell stocks and buy bonds (or vice versa) in the TSP to adjust your stock to bond ratio. Sell and buy in the Roth IRA to adjust your US to International stock ratio (this does not need adjusting as often).


Are you saying watch the percentage of stocks and bonds? So now it's 80/20, at what point should I start to shift that? You said earlier to add maybe 5% bonds every year. If I follow that should that keep me pretty much on track?

Dude2, yes you would be right. I'm in the AirForce. Why would you guess that?
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Re: Please look over my investment plan

Postby retiredjg » Mon Mar 26, 2012 10:32 am

oleblue wrote:Are you saying watch the percentage of stocks and bonds? So now it's 80/20, at what point should I start to shift that?

Yes, I'm saying watch the percentages of stocks, bonds, and the amount of stocks that are in international. If you set it to 80/20 today, it will be something different tomorrow since the market is always changing. It will probably just be a little different. However, after a few months, it may be more different. What I want you to do is just get a feeling for how the percentages move up and down in a normal market.

There are two ways to keep your portfolio on target. You can watch it fairly closely (say once a week or once a month) and adjust it when the stock to bond ratio gets out of whack. Or you can check it once a year and adjust it if things are out of whack. 81/19 is not out of whack, but you may decide that 86/14 is far enough from your target that you want to adjust it back.

You said earlier to add maybe 5% bonds every year. If I follow that should that keep me pretty much on track?

I think I said to add 5% bonds ever 5 years. This is just to make your portfolio more conservative as you grow older.
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Re: Please look over my investment plan

Postby Duckie » Mon Mar 26, 2012 5:12 pm

oleblue, if your retirement asset allocation is 56% US stocks, 24% international stocks, and 20% bonds, here is another possibility:

Taxable at Vanguard -- $21.8K -- 19%
19% (VTIAX) Vanguard Total International Stock Index Fund Admiral Shares (0.18%)

Roth IRA at Vanguard -- $30K -- 26%
5% (VGTSX) Vanguard Total International Stock Index Fund Investor Shares (0.22%)
21% (VTSAX) Vanguard Total Stock Market Index Fund Admiral Shares (0.07%)

TSP -- $63K -- 55%
10% G Fund (0.025%)
10% F Fund (0.025%)
28% C Fund (0.025%)
7% S Fund (0.024%) <-- Four parts C Fund plus one part S Fund roughly equals the total US stock market.

-- This ignores the tax cost of selling in taxable.
-- This has TISM in taxable to take advantage of the Foreign Tax Credit and it's a much better international option than the TSP I Fund.
-- As you contribute more, the international stays at Vanguard (in taxable if possible), the bonds stay in the TSP, and the US stocks fill in what's left.

If you haven't already, check out this thread on Military Investing and this article on Military finances in the Wiki.
Last edited by Duckie on Tue Mar 27, 2012 4:42 pm, edited 1 time in total.
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Re: Please look over my investment plan

Postby Chwrit » Mon Mar 26, 2012 11:17 pm

I am a 73 yr. old working part- time, self- employed professional Ph.D. In Education.
No other savings at all.

All my assets are at Scottrade: about $14,000.
Home unsold, worth about $500,000.

STOCKS:
AAPL= $3500
GOOG=$1280
QCOM=$400
OVTI=$400
GHL=$440
JPM=$450

ETFs
SPY=$450
IPE=$180
FMU=$2530
FTQ=$2559
FGD=$1200

I need to know which ETF BONDS or other Bond Funds or whatever to balance the stocks.
I am open to other suggestions.
Thank you.
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Location: CA

Re: Please look over my investment plan

Postby oleblue » Tue Mar 27, 2012 6:02 am

retiredjg wrote:
oleblue wrote:Are you saying watch the percentage of stocks and bonds? So now it's 80/20, at what point should I start to shift that?

Yes, I'm saying watch the percentages of stocks, bonds, and the amount of stocks that are in international. If you set it to 80/20 today, it will be something different tomorrow since the market is always changing. It will probably just be a little different. However, after a few months, it may be more different. What I want you to do is just get a feeling for how the percentages move up and down in a normal market.

There are two ways to keep your portfolio on target. You can watch it fairly closely (say once a week or once a month) and adjust it when the stock to bond ratio gets out of whack. Or you can check it once a year and adjust it if things are out of whack. 81/19 is not out of whack, but you may decide that 86/14 is far enough from your target that you want to adjust it back.

You said earlier to add maybe 5% bonds every year. If I follow that should that keep me pretty much on track?

I think I said to add 5% bonds ever 5 years. This is just to make your portfolio more conservative as you grow older.


I understand, thanks again for all your help.
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Re: Please look over my investment plan

Postby retiredjg » Tue Mar 27, 2012 8:44 am

Chwrit wrote:I am a 73 yr. old working part- time, self- employed professional Ph.D. In Education.
No other savings at all.

All my assets are at Scottrade: about $14,000.
Home unsold, worth about $500,000.

STOCKS:
AAPL= $3500
GOOG=$1280
QCOM=$400
OVTI=$400
GHL=$440
JPM=$450

ETFs
SPY=$450
IPE=$180
FMU=$2530
FTQ=$2559
FGD=$1200

I need to know which ETF BONDS or other Bond Funds or whatever to balance the stocks.
I am open to other suggestions.
Thank you.

Chwrit, welcome to the forum!

In order to help you best, you need to open your own thread rather than join in an old thread. Also more information is needed. See the link below called Asking Portfolio Questions. In particular, it appears you don't have any IRAs? Maybe a pension?

Yes, you need some bonds. The type of bonds will depend on your tax bracket.
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