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Brownsfan2k5
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Investing  Reply with quote  

So after joining Money-talk I have kicked my retirment savings into gear! I have currently been able to save around $3,500 a month for investing. My wife and I max out our Roths every year and will continue to do so. I have been putting the rest in a taxable investment account. I'm on track to have $1,000,000 by the time I retire from the military in 16 years. With this being said I have not put anything in my 401k (TSP) because I want to touch my money in 16 years. Is this a good idea? I just don't want to have a ton of money in accounts I cannot touch but I also fear having no money in my 401k.
Post Sun Jul 07, 2013 9:41 am
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oldguy
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quote:
I just don't want to have a ton of money in accounts I cannot touch but I also fear having no money in my 401k.


That's true, you need accessible money - you'll only be about 40 at retirement so you don't want everything locked away for 19 1/2 more years. But, OTOH, you won't need the whole stack the firest year - or the first decade - or maybe never. I didn't use any 401k money until I was forced to sell some at age 70 1/2.

You may want to leave some money invested for 50 more years (age 90). And you may need inflation protection during that 50 years (equities rather than savings products). Maybe a 50/50 approack would work - I would at least capture any 'match', that free money makes up for any extra taxes or penalties thta it take to free up some money early if needed.
Post Sun Jul 07, 2013 4:37 pm
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coaster
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I second the above suggestion. Wink

~Tim~
Post Mon Jul 08, 2013 4:56 am
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clydewolf
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Re: Investing  Reply with quote  

quote:
Originally posted by Brownsfan2k5

I have not put anything in my 401k (TSP)

As a tax payer, thank for that action. That means you will not receive the automatic 1% and any other service contributions. What you are doing will reduce government expenses, and potentially keep my tax bill low....
quote:

because I want to touch my money in 16 years. Is this a good idea?

Bad idea, read on.
quote:

I just don't want to have a ton of money in accounts I cannot touch but I also fear having no money in my 401k.

As the other posters stated. you are missing on the free money your employer will put into your TSP.

When you separate from the military/government job, you can move your TSP account to an IRA. Once in the IRA you can determine how much you will need annually and then isolate that in it's own IRA account. There is a method to take substantially equal distributions from that isolated account, called a 72t distribution.

The down side of the 72t distribution you must take the same amount each year. Failure to do that will result in all previous years distributions being subject to the 10 % early distribution penalty. Taxes would need to be paid on untaxed money distributed, but you avoid the 10% early distribution penalty for the longer of 5 years or until you reach age 59 1/2.

For more about 72t distributions go here: http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Substantially-Equal-Periodic-Payments

Also because you and your spouse will have contributed to your ROTH IRAs, you can take your annual contributions from your ROTH IRA at any time for any reason free from tax and penalty. So keep track of your ROTH IRA Contributions by completing Form 8606 and keep it with your annual form 5498 that you receive from your IRA custodian each May after you make your ROTH IRA contribution.

You may want to learn more about finances, savings, investing and insurance. I recommend you get a copy of Austin Pryor's book titled "The Sound Mind Investing Handbook. Ask at your local library for a copy. The book is also available at Amazon: http://www.amazon.com/s/ref=nb_sb_ss_i_0_12?url=search-alias%3Daps&field-keywords=austin%20pryor&sprefix=Austin+Pryor%2Caps%2C267&rh=i%3Aaps%2Ck%3Aaustin%20pryor

Contribute to your TSP account.
Post Tue Jul 09, 2013 1:55 am
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jallyjames
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Fundamentally buying into is all about setting up economic goals and making economic designs founded on those goals.....
Post Fri Jul 26, 2013 7:47 am
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Radix3d
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Re: Investing  Reply with quote  

quote:
Originally posted by clydewolf

As the other posters stated. you are missing on the free money your employer will put into your TSP.


I'm not sure what you're referring to but the military doesn't match unless things have changed since I got out.

In any case, I'm like you Brownsfan. I don't like the idea of the government telling me what to do with my money. I'm frugal and I invest my money but I no longer have a retirement account.
Post Sun Jul 28, 2013 5:34 am
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clydewolf
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Re: Investing  Reply with quote  

quote:
Originally posted by Radix3d
quote:
Originally posted by clydewolf

As the other posters stated. you are missing on the free money your employer will put into your TSP.


I'm not sure what you're referring to but the military doesn't match unless things have changed since I got out.

Thanks for the correction. You are correct, the military does not offer any match.

I was reading about FERS and CSRS employees, each has some different rules.
- FERS employees hired after July 31, 2010 are automatically enrolled in the TSP to contribute 3% of their pay. To stop the contribution or to change the amount of the contribution the employee must take some action.
A FERS employee hired before August 1, 2010 they already have a TSP account and the employer agency is contributing an amount equal to 1% to the TSP account. The employee has no control over this 1%.
FERS emplyees will receive a matching contribution from their employing agency.

- CSRS employees will have to take some action to open a TSP account.
CSRS employees will not receive any employer matching contributions.

Thanks for bringing this to my attention.

The methods of getting to your tax deferred and tax free money (ROTH IRA) I mentioned in the earlier post are still available.
Post Sun Jul 28, 2013 11:00 pm
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jamescruz
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Get yourself educated in the subject insurance. We live in a world of information and there is a wealth of information about investing. You can join an online investment group to know more about it.
Post Thu Aug 01, 2013 4:40 pm
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naina8888
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If you have a time then you can invest this money in any new business.
Post Sun Aug 11, 2013 5:44 am
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HerbertH
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Donít risk you retirement money. Consult a licensed financial planner. You might not necessarily want to go with his advice, but at least get the right knowledge and learn about options open to you.
Post Tue Aug 13, 2013 1:49 pm
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CraigEGI
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Re: Investing  Reply with quote  

quote:
Originally posted by Brownsfan2k5
So after joining Money-talk I have kicked my retirment savings into gear! I have currently been able to save around $3,500 a month for investing. My wife and I max out our Roths every year and will continue to do so. I have been putting the rest in a taxable investment account. I'm on track to have $1,000,000 by the time I retire from the military in 16 years. With this being said I have not put anything in my 401k (TSP) because I want to touch my money in 16 years. Is this a good idea? I just don't want to have a ton of money in accounts I cannot touch but I also fear having no money in my 401k.


Have you considered investing some of your funds in a gold IRA for a more diverse portfolio, physical gold and other precious metals are seen as a reliable investment and unlike cash and stocks perform well in difficult economic times. I think with 16 years left till retirement it's an ideal time right now..
Post Tue Oct 15, 2013 4:16 pm
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Radix3d
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Re: Investing  Reply with quote  

quote:
Originally posted by CraigEGI
quote:
Originally posted by Brownsfan2k5
So after joining Money-talk I have kicked my retirment savings into gear! I have currently been able to save around $3,500 a month for investing. My wife and I max out our Roths every year and will continue to do so. I have been putting the rest in a taxable investment account. I'm on track to have $1,000,000 by the time I retire from the military in 16 years. With this being said I have not put anything in my 401k (TSP) because I want to touch my money in 16 years. Is this a good idea? I just don't want to have a ton of money in accounts I cannot touch but I also fear having no money in my 401k.


Have you considered investing some of your funds in a gold IRA for a more diverse portfolio, physical gold and other precious metals are seen as a reliable investment and unlike cash and stocks perform well in difficult economic times. I think with 16 years left till retirement it's an ideal time right now..


Gold was trading at around $650 pre recession now it's trading twice that and yet we haven't had twice the inflation. The way i see it gold could lose as much as 50% of it's value when interest rates goes up and the economy improves. I would NOT invest it in gold at this time.
Post Wed Oct 16, 2013 5:59 am
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Wino
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One thing to remember is that IRA's and other retirement vehicles are often protected during bankruptcy proceedings. I'm not suggesting that you're going to go bankrupt, but just throwing out another factor that has not been mentioned. Also, I take the boyscout idea of hoping for the best, but planning for the worst to heart.

With an IRA, you get the pluses of having a tax deferral, matching (sometimes), and bankruptcy protection. You get the minuses of having to wait until you're 59.5 to withdraw without penalty and being restricted to the employer's choice of funds/vehicles.

I don't think gold is ever a good "investment." Sometimes, it's a good hedge, but there is very little intrinsic value to gold. It's only value is what someone else assigns to it. The only way I'd buy gold is as jewelry (and I can get 22K over here, which is 90% gold). Yes, I own some gold jewelry, and it will track the index as well as a bar that sits in a safe deposit box, but I can wear mine and at least get some use out of it.
Post Wed Oct 16, 2013 7:11 am
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coaster
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Re: Investing  Reply with quote  

quote:
Originally posted by CraigEGI
....physical gold and other precious metals are seen as a reliable investment and unlike cash and stocks perform well in difficult economic times...

Before taking statements like this at face value, it would be advisable to do your own research. Wink

~Tim~
Post Wed Oct 16, 2013 3:10 pm
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