Novice Investment Help

SeabeeGator · Mar 31, 2020

GC financial savants,

I have finally learned enough financial stuff to be dangerous. Was looking for some opinions on investment strategies. For TSP/401K, I’m looking at a 90/10 split between stocks and bonds (TSP - mix of C and S funds, leaning C, with G funds to reduce some risk; 401K - thinking a couple of higher performing large caps; a mid and small cap; and a bond fund that leans on corporate bonds - about 68%).

I’m also looking to open an investment account to play with a mix of funds and individual stocks. Probably not a ton of money to go here but we have some to play with.

Finally, trying to find a better vehicle for money in savings. It would need to be something I could easily draw on without much penalty but outperforms a savings account. Are money market accounts smart for this?

Any advice would be much appreciated.

BMF · Mar 31, 2020

SeabeeGator said:
GC financial savants,

I have finally learned enough financial stuff to be dangerous. Was looking for some opinions on investment strategies. For TSP/401K, I’m looking at a 90/10 split between stocks and bonds (TSP - mix of C and S funds, leaning C, with G funds to reduce some risk; 401K - thinking a couple of higher performing large caps; a mid and small cap; and a bond fund that leans on corporate bonds - about 68%).

I’m also looking to open an investment account to play with a mix of funds and individual stocks. Probably not a ton of money to go here but we have some to play with.

Finally, trying to find a better vehicle for money in savings. It would need to be something I could easily draw on without much penalty but outperforms a savings account. Are money market accounts smart for this?

Any advice would be much appreciated.

For TSP, 90/10 is smart. But consider putting some in the I fund also (along w/ C & S). I recently changed mine to be much more aggressive since the tanking - so I'm buying more C, S, and I while the market is down. I lost about 20% of my account in this downturn, which sucks - but my personal Roth/brokerage is down even more.

For savings - I keep cash in a money market at PenFed Credit Union, which earns 1.6% (and it was 2% just a few months ago, but since the Fed keeps cutting rates they keep dropping their rate).

I have a brokerage account w/ USAA - but they are about to let Charles Schwab take over their brokerage business and I'm not sure how that's going to work.

Right now is probably a good time to buy index funds (S&P 500, NASDAQ type) since they have taken a 20+% dive.

Concrete Helmet · Mar 31, 2020

Watch everything that I do.....and then do the complete opposite. :lol:

Actually I'm kinda new at managing some of my retirement funds and thought I did alright even during the slide over the last 5 weeks. I lost pretty close to 20% but I was way too aggressive(almost 90% stock)
Money Market for sure for cash.
Do you have any investment property? Maybe this downturn will knock RE prices down a notch or 2 and you can grab a good deal...

SeabeeGator · Mar 31, 2020

BMF said:
For TSP, 90/10 is smart. But consider putting some in the I fund also (along w/ C & S). I recently changed mine to be much more aggressive since the tanking - so I'm buying more C, S, and I while the market is down. I lost about 20% of my account in this downturn, which sucks - but my personal Roth/brokerage is down even more.

For savings - I keep cash in a money market at PenFed Credit Union, which earns 1.6% (and it was 2% just a few months ago, but since the Fed keeps cutting rates they keep dropping their rate).

I have a brokerage account w/ USAA - but they are about to let Charles Schwab take over their brokerage business and I'm not sure how that's going to work.

Right now is probably a good time to buy index funds (S&P 500, NASDAQ type) since they have taken a 20+% dive.

I’ve been reading a lot about the I. Have you read tspsmart.com? Basically, the theory I read was that most C fund companies (S&P 500) are largely invested overseas - in some cases, 30%+. They get the benefits that I fund companies do without going all in. Also, I does not do emerging markets - only stable ones - which strengthens that theory. Is that way out there thinking or does it make sense to you too? I’m a novice so I don’t know much more than what I read.

I’m 70/20/10 C/S/G right now based on something else I read - basically, S fund companies perform better DEC-MAR and C perform better the rest of the year historically. Figured I’d switch it up between the two based on season.

I need to look into a money market ASAP. We have a bunch in savings and it’s doing nothing. I wish usaa had something. Is it easy to withdraw or are there penalties?

Thank you for the thoughtful response. Seems like you have a much bigger but similar portfolio type so it’s great to hear from a more seasoned investor.

SeabeeGator · Mar 31, 2020

Concrete Helmet said:
Watch everything that I do.....and then do the complete opposite.

Actually I'm kinda new at managing some of my retirement funds and thought I did alright even during the slide over the last 5 weeks. I lost pretty close to 20% but I was way too aggressive(almost 90% stock)
Money Market for sure for cash.
Do you have any investment property? Maybe this downturn will knock RE prices down a notch or 2 and you can grab a good deal...

now I’m confused - should I disregard your advice to do the opposite because that’s the opposite of what you said????

No investment properties for us - yet. Colorado has some enticing options but we have been looking at the market to get in before dropping property money.

Thanks for the input. May not agree on much but at least we have surfing and investing!

FireFoley · Apr 1, 2020

Concrete Helmet said:
Watch everything that I do.....and then do the complete opposite.

Actually I'm kinda new at managing some of my retirement funds and thought I did alright even during the slide over the last 5 weeks. I lost pretty close to 20% but I was way too aggressive(almost 90% stock)
Money Market for sure for cash.
Do you have any investment property? Maybe this downturn will knock RE prices down a notch or 2 and you can grab a good deal...

@Concrete Helmet since you are reasonably close to the residential real estate market, please keep us posted if you see a slow or shut down. I know all RE is local, but some of us might be looking to diversify and/or purchase a primary home. Now that I have learned that mortgage lenders can and do receive margin calls, it seems to reason that perhaps they will not be able to make as many loans. And all that will trickle down someway, somehow. And perhaps if that happens, cash will be king and a property or two may be able to be picked up for those not seeking a loan.

Detroitgator · Apr 1, 2020

FireFoley said:
@Concrete Helmet since you are reasonably close to the residential real estate market, please keep us posted if you see a slow or shut down. I know all RE is local, but some of us might be looking to diversify and/or purchase a primary home. Now that I have learned that mortgage lenders can and do receive margin calls, it seems to reason that perhaps they will not be able to make as many loans. And all that will trickle down someway, somehow. And perhaps if that happens, cash will be king and a property or two may be able to be picked up for those not seeking a loan.

I second this... I'm keeping my powder dry for RE as well.

Concrete Helmet · Apr 1, 2020

FireFoley said:
@Concrete Helmet since you are reasonably close to the residential real estate market, please keep us posted if you see a slow or shut down. I know all RE is local, but some of us might be looking to diversify and/or purchase a primary home. Now that I have learned that mortgage lenders can and do receive margin calls, it seems to reason that perhaps they will not be able to make as many loans. And all that will trickle down someway, somehow. And perhaps if that happens, cash will be king and a property or two may be able to be picked up for those not seeking a loan.

Undoubtedly there will be some defaults no matter what. I have seen too much crappy paper got pushed out over the last 3-4 years to know that....not to mention property values for smaller 1700sqft and less properties has been pushed to new highs due to lack of inventory. Meanwhile judging from payoffs we do for personal credit not hardly a damned person learned their lesson from 2005-2010...some of these CC accounts are higher than the annual income they show on the loan application....

Thank god were pretty well versed at doing short sale negotiations from the last fallout....and the demand for refi buyouts from divorces caused by financial hardships also creates a little blossom of business. I'm hoping the rates go up myself.....

BMF · Apr 1, 2020

Concrete Helmet said:
Undoubtedly there will be some defaults no matter what. I have seen too much crappy paper got pushed out over the last 3-4 years to know that....not to mention property values for smaller 1700sqft and less properties has been pushed to new highs due to lack of inventory. Meanwhile judging from payoffs we do for personal credit not hardly a damned person learned their lesson from 2005-2010...some of these CC accounts are higher than the annual income they show on the loan application....

Thank god were pretty well versed at doing short sale negotiations from the last fallout....and the demand for refi buyouts from divorces caused by financial hardships also creates a little blossom of business. I'm hoping the rates go up myself.....

CH, put me on your list for RE. We're planning to move from DC to Tampa in the next 12-15 months - obviously if the economy completely tanks that may change our plans, but right now that's the plan. We're looking at south Tampa and it is completely out of control (prices).

BMF · Apr 1, 2020

SeabeeGator said:
I’ve been reading a lot about the I. Have you read tspsmart.com? Basically, the theory I read was that most C fund companies (S&P 500) are largely invested overseas - in some cases, 30%+. They get the benefits that I fund companies do without going all in. Also, I does not do emerging markets - only stable ones - which strengthens that theory. Is that way out there thinking or does it make sense to you too? I’m a novice so I don’t know much more than what I read.

I’m 70/20/10 C/S/G right now based on something else I read - basically, S fund companies perform better DEC-MAR and C perform better the rest of the year historically. Figured I’d switch it up between the two based on season.

I need to look into a money market ASAP. We have a bunch in savings and it’s doing nothing. I wish usaa had something. Is it easy to withdraw or are there penalties?

Thank you for the thoughtful response. Seems like you have a much bigger but similar portfolio type so it’s great to hear from a more seasoned investor.

Sounds like you have a solid plan w/ the TSP. Try to max out your contribution - if you can swing it. It's one of my biggest regrets (I turn 50 this year and can put in even more, which I'm doing).

I agree w/ the other recommendations on getting into RE. Sit tight and if/when prices start to drop be ready to buy....have your cash for the down payment set aside. There are so many things you can do w/ write-off's owning rental properties - not to mention having somebody else pay the mortgage while you build more and more equity.

Concrete Helmet · Apr 1, 2020

BMF said:
CH, put me on your list for RE. We're planning to move from DC to Tampa in the next 12-15 months - obviously if the economy completely tanks that may change our plans, but right now that's the plan. We're looking at south Tampa and it is completely out of control (prices).

You got it. A year from now may as well be an eternity until we get past this Covid stuff...Prices could be drastically lower in 12 month's...in fact if it gets real bad I might know of a sweet deal on a lake house that also has a rental unit in the back :lol:

BMF · Apr 1, 2020

I just checked PenFed's interest rates on their savings account and it's down to 1.4% (from 2% just a few months ago). I imagine it drops again.

I have a ton of cash in the Streetshares account earning 5%. I'm not concerned, yet, about that account - but it's not FDIC insured.

FireFoley · Apr 1, 2020

BMF said:
CH, put me on your list for RE. We're planning to move from DC to Tampa in the next 12-15 months - obviously if the economy completely tanks that may change our plans, but right now that's the plan. We're looking at south Tampa and it is completely out of control (prices).

I would never give advice specifically on any asset someone might be interested in, but @Concrete Helmet might be correct if this stuff remains intact for a lot longer. And all that cash might come in handy if more people get financially stressed (see @Concrete Helmet 's comment on credit card debt. He ain't wrong). And he is absolutely correct about the smaller, less pricey homes having gone up in price exponentially in % terms compared to higher priced homes. 10K on 200K is a lot more than 10K on 500K. You have 1000 people looking at 200K and 10 people looking at 500K. Be that as it may, just like we have talked about trying to buy or sell certain stocks at ridiculous prices, sometimes the market comes to you and you get a few of those stocks. And don;t be surprised if that might not happen with a home you seek. All they can do is say "no", but cash, quick closing, etc. can carry a lot of weight when people are in a bind.

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Novice Investment Help

SeabeeGator

Well-Known Member

BMF

Bad Mother....

Concrete Helmet

Hook, Line, and Sinker

SeabeeGator

Well-Known Member

SeabeeGator

Well-Known Member

FireFoley

Senior Member

Detroitgator

Well-Known Member

Concrete Helmet

Hook, Line, and Sinker

BMF

Bad Mother....

BMF

Bad Mother....

Concrete Helmet

Hook, Line, and Sinker

BMF

Bad Mother....

FireFoley

Senior Member

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