As a Federal Employee, my only options for a 401K type program is the Thrift Savings Program. The version that I am involved in offers no (read that zero!) matching by the employer, but I do get to put up to 5% of my income into it as tax defered. I have 3 choices as to where to invest.

1. A government security fund
2. A government bond fund
3. A fund that mimics a general index fund.

I can take my deduction and divide it among the 3 funds, and I can take what is in there, and move it around.

Any thoughts as to how my pot should be split up, and how my deductions should be split?

thanks... Paul

Greetings, Paul, and welcome.

<<As a Federal Employee, my only options for a 401K type program is the Thrift Savings Program. The version that I am involved in offers no (read that zero!) matching by the employer, but I do get to put up to 5% of my income into it as tax defered. I have 3 choices as to where to invest.

1. A government security fund
2. A government bond fund
3. A fund that mimics a general index fund.

I can take my deduction and divide it among the 3 funds, and I can take what is in there, and move it around.

Any thoughts as to how my pot should be split up, and how my deductions should be split?>>

The general index fund has been a good performer over the past three years. Just based on historical averages and the fact it's the only stock fund available to you, it will (over ten years) almost certainly will beat the other two, which are fixed income funds. IMHO, if you have ten or more years before you retire, #3 is the choice du jour.

But that's me, and you are you. Investing is extremely personal and must be your decision based on a number of things, not the least of which is your ability to sleep at night. The stock market can be very volatile. How would you feel if you woke up one morning and saw that the value of your holdings had suddenly dropped by 20% or more? If you would stay the course and not give up because you know the market will eventually recover to proceed on to new highs, then you're o.k. OTOH, if the dip would cause you to panic and lose sleep, the fund is not for you. Only you can answer that question. Just keep in mind, though, that for every ten-year period of time ending on 12/31 since that of 12/31/41, the stock market has beaten any other investment you could have made - despite its ups and downs in intervening years.

Regards……Pixy

Fund your ROTH first. If you are willing to set aside more than 2000 a year then go to the TSP.

Good luck,

nakedcall

OK, I'll bite. why should I fund the Roth IRA before the TSP?

Paul

Paul,

<<OK, I'll bite. why should I fund the Roth IRA before the TSP?>>

Although it was nakedcall's comment, one reason is the potential for a higher return coupled with tax-free withdrawals. In the absence of an employer match, the possible higher return can make it a much better option. But the higher return depends on what you're comfortable with and how you invest the money.

Regards.....Pixy

My under standing is that you have no match on your TSP.

You have very limited investment options for your TSP.

Your Roth can be invested in anything.

Tax free is much better then tax deferred.
I have a program I use with clients to analyze the Roth vs the traditional. For most people the Roth it the clear winner.

You should do both but my first $2000 would go to the Roth.

Good luck,

nakedcall

New to this board so haven't been privy to past exchanges. Question I have is that I am 58, retired, have around 200k in conventional IRA and am not certain what advantages converting to a Roth will provide. Are there any?

Greetings, Lodger, and welcome.

<<New to this board so haven't been privy to past exchanges. Question I have is that I am 58, retired, have around 200k in conventional IRA and am not certain what advantages converting to a Roth will provide. Are there any?>>

It depends on you own circumstances. You trade paying taxes today for the right to withdraw money tax-free later. However, it's not an easy decision. Scroll back in this folder to 1/31/98 and read the thread under "Roth Contributions and Conversions" to get an idea of what you should look at before making a final decision.

Regards…..Pixy

Dear nakedcall:

I contribute 10% of my base pay of $52,400. to the TSP and the government contributes an additional 5%. At the present time there are three different investment plans available and I can invest using any combination of the plans. The C paln is stocks, F Plan is corporate bond and the G plan is government bonds. I am at the present time 100% invested in the C plan.

Outside of this investment I have no other investments.However, within the next six months I anticipate having available approximately $20,000.00 from my late mother's estate which I can afford to invest. I am 52 years old plan on retiring at age 60 in August 2005. My total annual income is $52,000.00 base salary, $14,000.00 guaranteed overtime, and $20,000.00 in retirement income from New York State retirement system. I know I can easily afford $2,000.00 annually into a ROTH account and will do that starting this year. My question is with the $20,000.00 should I invest in the DOW Divident Approach or should I be looking in another direction. Another consideration is that at the present time my projected retirement income at age 62yrs 8mos will be approximately $72,000-$75,000.My wife does not work and therefore will have no other retirement benefits other then social security which will be base on my earnings.

I would appreciate any suggestions that you may be able to offer to help me get started in investing

"Scroll back in this folder to 1/31/98 and read the thread under "Roth Contributions and Conversions"

Okay fill me in on the quickest way to scroll back. I have tried the search route to no avail.

BuffaloFool,

<<I know I can easily afford $2,000.00 annually into a ROTH account and will do that starting this year. My question is with the $20,000.00 should I invest in the DOW Divident Approach or should I be looking in another direction. Another consideration is that at the present time my projected retirement income at age 62yrs 8mos will be approximately $72,000-$75,000.My wife does not work and therefore will have no other retirement benefits other then social security which will be base on my earnings.

I would appreciate any suggestions that you may be able to offer to help me get started in investing.>>

You seem to have an assured source of income, will invest some $2K per year in a Roth over the next 10 to 11 years, and have another $20K you can invest now. All imply you can assume some risk, and for most folks that means stocks. However, only you can determine what risks you are willing to assume. And regardless of what someone (me included) tells you on these boards, only you can decide in what you should invest.

From the few posts I've seen from you within TMF, I gather you're relatively new to Fooldom. I also assume from that you're new to investing. That's great on both counts! You have wandered into a forum that believes you, as an individual, can do far better for yourself than most professional money managers. Provided, that is, you take some time to learn a few basic investment concepts and do some self-examination to see where you fit on the risk tolerance scale. Therefore, why not take some time now -- not later -- to be sure about what you want to do. Start first by reading The 13 Steps to Investing Foolishly, which you can access from the main, opening screen to The Motley Fool. They will suggest some important things you should consider. Then I suggest you toddle over to your local library, discount bookstore, or even here in the Fool Mart, and pick up some easily read, easily understood, inexpensive texts that will thoroughly explain how to invest in stocks using some simple systems that will take but an hour per year of your time (if you're slow) yet produce returns that put the majority of professional money managers to shame. I suggest and commend the following to you: "Beating the Dow" by O'Higgins; "The Dividend Investor" by Petty and Knowles; "The Motley Fool Investment Guide" by the Gardner brothers; "One Up on Wall Street" by Lynch; and "What Works on Wall Street" by O'Shaughnessey. All are well worth their low cost and the small investment in time it takes to read them. Get them and read them. You'll be glad you did. This won't take you long to do, maybe 30 days. And don't worry, the market will still be there when you're ready to do some serious investing.

While you're doing all that, also take some time to explore the various nooks and crannies of Fooldom to see what others are doing and what they're discussing. In the process, you'll gain a wealth of knowledge and information that will serve to clarify how you want to approach this very personal issue. Don't be afraid to ask a question anywhere in Fooldom. Folks around here are great about answering questions and clearing up misunderstandings. Get the answers, consider all, and then decide.

Regards.......Pixy

Lodger,

<<"Scroll back in this folder to 1/31/98 and read the thread under "Roth Contributions and Conversions"

Okay fill me in on the quickest way to scroll back. I have tried the search route to no avail.>>

When the folder opens to the screen that shows you all unread messages, and the top there is an area that has two "<<" and two ">>" with a window and the word skip. The window is a pull-down box that will allow you to chose the number of days you wish to scroll backwards ( use the << arrows) or forwards (use the >> arrows). Count backwards the requisite number of days, choose your number, and hit the direction of the "Skip."

Regards……Pixy

>>><<"Scroll back in this folder to 1/31/98 and read the thread under "Roth Contributions and Conversions"

Okay fill me in on the quickest way to scroll back. I have tried the search route to no avail.>><<<

Pixy,

I don't know if it's been changed yet, but I noticed "contributions" was misspelled in the original post, which may confound people searching for what is obviously a very worthy thread.

Regards,

orangeblood

Orangeblood,

<<I don't know if it's been changed yet, but I noticed "contributions" was misspelled in the original post, which may confound people searching for what is obviously a very worthy thread.>>

You're right. I hadn't noticed before. The subject reads "Roth Contriubtions...." which certainly messes up a thread search. Thanks for pointing that out.

Regards......Pixy

Dear Pixy:

Thanks for the advise. You are right on, I am new to Fooldom and investing. Coming from a bluecollar background where no family members,friends, co-workers or neighbors had stock investments or any investment other then a savings bank account having an opportunity to consider some serious investing is scary. However, I also believe with a little study and research I believe I can do better for myself then a professional manager can do.

I have just finished reading "The Motley Fool Investment Guide",am about to start reading "You Have More Then You Think". I greatly appreciate your advise and I feel very lucky to have come across the Motley Fool and Fooldom. This is just what I was looking for and it has greatly improved my confidence in making good investment decisions.

At this point in time I am inclined to invested the twenty thousand in the Dow Dividend Approach, invest $200. per month in a ROTH IRA and $100.00 per month in a DIP account. This is all money that I feel that I can risk without harming an already good looking retirement future. Of course before I actually make my forst investment I intend to read at least several of the publications that you have recommended.

Sincerely.......BUFFALOFOOL

BuffaloFool,

<<At this point in time I am inclined to invested the twenty thousand in the Dow Dividend Approach, invest $200. per month in a ROTH IRA and $100.00 per month in a DIP account. This is all money that I feel that I can risk without harming an already good looking retirement future. Of course before I actually make my forst investment I intend to read at least several of the publications that you have recommended.>>

All that counts is that YOU are comfortable with the strategy. As long as that's true, all is fine. Fool on, sir, and continue learning. With more of the latter, you should do quite well for yourself.

Regards….Pixy

>> invest $200. per month in a ROTH IRA
-------------------------------
That is too much, unless you and your spouse are setting up separate Roth IRAs. The maximum annual contribution per person is $2,000 to all IRAs combined.

TchrP said:

>> invest $200. per month in a ROTH IRA
-------------------------------
That is too much, unless you and your spouse are setting up separate Roth IRAs. The maximum annual contribution per person is $2,000 to all IRAs combined.

To which Pixy responds, "Good catch. Your eyes were much more sharp than mine."

Regards....Pixy