Tsp

[Squid]

you can put the $$ in a mutual fund/ stocks outside of any tax sheltered retirement plan. If it's "save for a rainy day" money vice the sky is the limit, you may want to throw it in a diversified mutual fund. Maybe an index fund of some sort. (Maybe a tax free bond fund!!!) If you have money to throw around, watch Jim Cramer's Mad Money on CNBC @ 1800 eastern time. His advice is about trading, not investing.

Also, Chief, you didn't mention matching contributions (I know, since we are military we don't get any.)

Having bought a house in Meridian, MS, I can say that you really gotta hate life to want to come back here and live "off the fat of the land". I can't wait to sell this thing in a couple of years. The housing market here is doing nothing, FAST!

Some TAX FREE BOND FUNDS from USAA (Since I use USAA)
Annualized over 5 years:

California USCBX 5.99%
Florida UFLTX 6.59%
New York USNYX 6.67%
Intermediate Term USATX 5.74%
Long Term USTEX 6.97%
Short Term USSTX 3.57%
Virginia USVAX 6.16%

 

[Fly Navy]

you can put the $$ in a mutual fund/ stocks outside of any tax sheltered retirement plan. If it's "save for a rainy day" money vice the sky is the limit, you may want to throw it in a diversified mutual fund. Maybe an index fund of some sort. (Maybe a tax free bond fund!!!) If you have money to throw around, watch Jim Cramer's Mad Money on CNBC @ 1800 eastern time. His advice is about trading, not investing.

Also, Chief, you didn't mention matching contributions (I know, since we are military we don't get any.)

Having bought a house in Meridian, MS, I can say that you really gotta hate life to want to come back here and live "off the fat of the land". I can't wait to sell this thing in a couple of years. The housing market here is doing nothing, FAST!

Some TAX FREE BOND FUNDS from USAA (Since I use USAA)
Annualized over 5 years:

California USCBX 5.99%
Florida UFLTX 6.59%
New York USNYX 6.67%
Intermediate Term USATX 5.74%
Long Term USTEX 6.97%
Short Term USSTX 3.57%
Virginia USVAX 6.16%

Now what's the deal with these, if I take my savings (i.e. rainy day fund) and put them in something like that tax free bond.... can I take it out if I need it "right now"?

 

[The Chief]

... My hubby is not real wild about paying some schmuck (sp?) to manage our money and make some bucks. Curious to what ya think?

Schmuck is apropos. If a money manager is any good I would not be able to afford them, as they would be more interested in making their own money rather than taking mine.

 

[FlyingBeagle]

Ok, I've decided that I want to max my Roth. If 4000 is the max per year, when is the year over? Do I have until Dec 31, tax day or some other arbitrary government date?
Also, correct me if I'm wrong, but my understanding is that I have to wait till I'm 60 to take out my Roth, but I can pull out my TSP as soon as I leave the Navy, whether I do 10 or 20 years, right?

 

[Squid]

Now what's the deal with these, if I take my savings (i.e. rainy day fund) and put them in something like that tax free bond.... can I take it out if I need it "right now"?

it's a mutual fund (the X on the end gives it away), so I assume so, but call USAA to be sure. 800-531-8448 is their mutual fund line.

 

[The Chief]

I've decided that I want to max my Roth. If 4000 is the max per year, when is the year over?

Correct, max went from $3000 in 2004 to $4000 in 2005, unless you are over 50yo. If over 50 it is $4500 (so called catch up)

Do I have until Dec 31, tax day or some other arbitrary government date?

You have until 4/15/2006 to make your 2005 contribution.


Also, correct me if I'm wrong, but my understanding is that I have to wait till I'm 60 to take out my Roth,

No, my understanding is that you can cash out your Roth Ira contributions at any time without any penalty. I said Contributions. Your earnings are tax free, ergo cannot get them w/o penalty until 59 1/2.

but I can pull out my TSP as soon as I leave the Navy, whether I do 10 or 20 years, right?

Not quite. You can take your TSP with you when you leave the Navy but to prevent penalty (if under 591/2) you must roll over ENTIRE TSP into a Traditional IRA or 401(like) instrument. Think you have 30 days to do that, not sure, but know every penny must be rolled over.

RelatedYou can obtain a loan from your TSP for certain "reasons". It is an interesting aspect of TSP in that you pay yourself the interest on the money you borrowed and if the interest is AGI deductable, you can deduct from your AGI the interest that you paid yourself! Caution: Loan must be paid back, in full, before you leave the Navy as repayment of the loan can only be made by payroll deduction.

 

[FlyingBeagle]

Chief, you are the man. The one question that still remains is which TSP fund to invest in (L, G, F, C, S, I). It sounds like L is a managed one for people like me who have no idea what to do on their own. Anyone use L?

 

[Fly Navy]

You have until 4/15/2006 to make your 2005 contribution.

I wish I knew that before I started paying 333.33 / month to my IRA. Good deal, I learned something.

 

[Squid]

Chief, you are the man. The one question that still remains is which TSP fund to invest in (L, G, F, C, S, I). It sounds like L is a managed one for people like me who have no idea what to do on their own. Anyone use L?

Yeah, if you just wanna "let it ride" so to speak, throw it in an L fund. I like to be a little more proactive (you can only go so far as they are mutual funds and not individual stocks/sectors), so I re-evaluate my earnings on just about a quarterly basis.

Seeing as how the CFGSI funds don't exactly TELL you the exact companies what they invest in, you can only look at the indices(sp?) they track to see where they are headed.

c = big companies, fortune 500 stuff, think intel micro$haft gm, ford, georgia pacific

s = small(er) companies with "larger growth potential", and also the potential to fail

i = international companies. how is south america, africe and the developing countries doing nowadays (pretty good actually)

f = fixed income, I think like 120 minus your age is the % you should contribute to F fund. It's boring, safe, but boring. The share values won't really move, but every quarter/year/whatever, you get a dividend that keeps compounding. Think of it as a savings account with a shot of espresso.

g = similar to F fund. think of it as savings account with afternoon tea.

 

[Gatordev]

I wish I knew that before I started paying 333.33 / month to my IRA. Good deal, I learned something.

I actually do that anyway throughout the year. The whole "pay yourself first" thing seems to work for me. Then, at about Christmas when I see my folks, my dad will make a comment and ask if I've paid my IRA this year yet. I usually mumble something, and then go log on the web and move the money I've already been sending to my one account, and just send it over to the IRAs in one lump.

 

[phrogdriver]

Key thing for me is to put it all on "autopilot." My Roth contributions, other mutual funds, and money market "emergency" fund are all taken out before I, or more importantly, my wife, ever see it in our main bank account. I'm a big fan of index funds and dollar cost averaging. Let it ride and make the miracle of compound interest work for you.

While I don't think a military member needs quite as large an emergency fund as a civilian, it is something you should have. You don't want to have to break into the plastic for things when an unexpected event comes about, like a property sitting on the market because your a$$hole renter trashed the place on the way out, or whatever--just thinking aloud.

 

[Squid]

dollar-cost averaging much gatordev?

 

[squeeze]

Key thing for me is to put it all on "autopilot." My Roth contributions, other mutual funds, and money market "emergency" fund are all taken out before I, or more importantly, my wife, ever see it in our main bank account.

While I agree with you on the "autopilot" aspect, I don't really agree with the allotment method. I used to use the allotments, but have since set up USAA to auto-draft the same amounts to a higher yield savings account each payday. If you think about it, you're not maximizing your return with allotments since they don't pay out till the end of the month. So in essence, you're losing out on a month's interest return.

Mine's all setup to transfer automatically, but it does it on the 1st and the 15th. That way, while I may see it in my account for a day or two, it still goes on time every time.

Just my .02

 

[phrogdriver]

If you think about it, you're not maximizing your return with allotments since they don't pay out till the end of the month. So in essence, you're losing out on a month's interest return.
Just my .02

I thought about it some more. It doesn't matter much. I lost out on interest compared to your method on only the very first month I was on allotment. After that, the practical effect is that the money goes downrange at the beginning of each month. The fact that the money is actually from the preceding month's pay is irrelevant after the first month. I'll trade that few days' interest for the convenience and psychological benefits of the allotment.

 

[Gatordev]

dollar-cost averaging much gatordev?

Um....Money is green. I like lamp.

You all and your technical terms. Not really sure what you meant, but I can see my lazy method probably makes me lose out out on a little bit of interest. However, one of the IRA accounts I have I also have as a regular one where the money goes, so it's still about the same.