How to begin investing? TSP, 401(k), IRAs, Stocks, Mutual Funds?

[Rogue]

Regarding investments, retirement funds, and getting to retire fat and happy in 2030 or as soon thereafter as possible.

I don't have all the details I need to have probably, but I'd still like to see what some of the smarter and richer SouthOvalians recommend. If you're poor like me and really know your stuff, by all means chime in.

Here's the dealio...I'm a government employee, 34 y.o.. Who knows if I'll have social security? I hope to have a FERS pension and whatever I can save and accumulate through the Thrift Savings Plan (http://tsp.gov/) and maybe some other investments. Mrs. Rogue is 27 and I want to retire very well. I've been putting in 5% to 10% of my salary since I started with the Feds and finally have 100k in the TSP, depending on the value of share prices each day (ranges from 98k to 106k lately).

I found a site, tsptalk.com , that is full of basically day-traders. They claim to be getting rich by moving funds around between the available funds, timing it a day ahead based on speculation because you can't move the $$ instantly.

I've also wanted to invest separately and don't know where to start. In addition to the TSP stuff I figure I can save or cough up 1000 - 2500 a year to invest somewhere else instead of blowing it on beer and wimmins. ;)
I have no great knowledge about the stock market and am pretty certain I won't turn into a day-trader. I am comfortable with handing over money to someone that has a proven record and putting most of it into high risk/high reward areas while I'm relatively young.

So, I have some questions. Some are just nuts/bolts and some, I believe, require more financial sophistication. (Yeah this will go well on the SO, won't it?)

1) Are these tsptalk.com cats crazy?

2) IYO, is it better to try this day-trading scheme awhile or just decide how much $$ to send to the different funds and leave it alone?

3) Where else to invest and how?

4) I think it makes sense to start a traditional Roth IRA and a regular IRA for me. Am I nuts?

5) Stocks, mutual funds, etc....where to start? Do I just call up a big firm like Merril Lynch or someone and make an appointment? Would one of them take me seriously and make me rich a little at time or are these places where you go if you are already rich?

[OKLA21FAN]

SHHHHHHHHHHHHHHHHHHH!!!!!

the game is about to start.....get er priorities straight! :pop:

[Rogue]

Absolutely right 21!

[Frozen Sooner]

Never ever ever ever ever ever ever ever day trade in your retirement fund.

NEVER.

[Cam]

Never ever ever ever ever ever ever ever day trade in your retirement fund.

NEVER.
Rule #1 IMO. Fund it regularly and then act like it doesn't exist.

PM me with your contact info and I'll see if my wife'll give you some pointers. She's not licensed in Tenn, but she can point you in the right direction.

[Vaevictis]

1) Are these tsptalk.com cats crazy?

My understanding is that yes, the day traders usually are crazy. A good chunk of them aren't doing anything much more than gambling.


2) IYO, is it better to try this day-trading scheme awhile or just decide how much $$ to send to the different funds and leave it alone?

IMO, unless you're extremely skilled and/or have some special advantage, day trading is a bad idea. It's very high risk, more so when you don't have a strong fundamental understanding of what's going on.

IE, if you have to ask whether you should do day trading, you're probably not qualified to do it in a manner that is different from just gambling.

One of the things you need to understand about day traders is that they usually don't know when to quit. It works for people when the market is good, but eventually, the gambling catches up to them and they go bust.

This is NOT the kind of thing you want with a retirement account.


3) Where else to invest and how?

Whole books have been written on this. At a minimum, you should know a little about portfolio balancing so as to manage your risk/return ratio.


4) I think it makes sense to start a traditional Roth IRA and a regular IRA for me. Am I nuts?

I love me some IRAs, especially Roth IRAs. One of the very nice things about these tax protected accounts is that you no longer have to worry about the tax implications of the timing of asset sales. (ie, no worry about long term v. short term capital gains)


5) Stocks, mutual funds, etc....where to start? Do I just call up a big firm like Merril Lynch or someone and make an appointment? Would one of them take me seriously and make me rich a little at time or are these places where you go if you are already rich?

Do you want to do company research yourself? If so, stocks. If not, index or mutual funds are probably where you want to start.

As far as whether they'll take you seriously or not, well, that depends on how hungry the rep is, and how much you have to invest. If you were to put down that $100k, you'll find someone who will take you seriously. At $2k, not so much.

But, in any case, you probably don't want a professional broker unless you have pretty crazy amounts of money -- multiple millions -- because they eat into your returns and provide very little value.

[Rogue]

Thanks all. I hope that someone else benefits from this advice too and chimes in with questions.

Froz, glad your advice affirms my gut reaction. Reading some of these stories about the "fast, free money, too good to be true, etc..." was starting to be tempting. So, I'll back away from the idiot button when it comes to day trading.

:confused: Course, now I have more questions so...if you'll indulge me...

As I get older and it is time to move money from the higher risk funds in the TSP to the more secure ones (like nearer to retirement) how do I make that interfund transfer in a smart way?



As far as whether they'll take you seriously or not, well, that depends on how hungry the rep is, and how much you have to invest. If you were to put down that $100k, you'll find someone who will take you seriously. At $2k, not so much.

But, in any case, you probably don't want a professional broker unless you have pretty crazy amounts of money -- multiple millions -- because they eat into your returns and provide very little value.


Mutual Funds:
OK, so how and where do I buy a mutual fund? Yes, seriously. I've actually looked at several. Is it something I can buy into and then send $100 a month to automatically also? Can I just hop on down to my credit union and ask to see what mutual funds they have available?


That IS how I'd get an IRA, correct?

Also, is one IRA the same as another and one Roth IRA the same as the next? IOW, do different banks have different rates of return on an IRA and would it make sense to shop around for one?


What about the edwardjoneses of the world? I'm sure they must have some good ones, but most of the folks at those shops that I've encountered that work there mostly seem like snakeoil salesmen/women that took a 3-week course on how to talk me into writing a big check.

[Newbomb Turk]

what I do is just throw as much into TSP as I can and don't pay much attention to it...but I'm lazy.

[Vaevictis]

As I get older and it is time to move money from the higher risk funds in the TSP to the more secure ones (like nearer to retirement) how do I make that interfund transfer in a smart way?

Ideally, you should have a portfolio balance that reflects the risks you're willing to assume at any given time. Simply 'adjust' the portfolio balance to whatever risk profile you want at any given time. Also, make sure to 're-adjust' it from time to time, as gains/losses will naturally throw your balance out of whack.

If that doesn't answer your question, I think I'm not really understanding it.


Mutual Funds:
OK, so how and where do I buy a mutual fund? Yes, seriously. I've actually looked at several. Is it something I can buy into and then send $100 a month to automatically also? Can I just hop on down to my credit union and ask to see what mutual funds they have available?

Basically, you find an entity that will sell you the funds you want to buy. Different entities will sell you different funds, and often this is impacted by the commission the funds are willing to give the people acting as the middle man. So look hard at the funds that someone is trying to sell you -- often, the quality of the fund is not the only (or primary) reason it's being sold to you.

When buying the funds, also make sure you watch how much they charge to manage your money. This impacts your returns, obviously. Seriously take a look at index funds -- because they just track an index, the fees tend to be very low.

Some funds can be bought just like stocks at any broker.


That IS how I'd get an IRA, correct?

Yep, but not necessarily how you should...


Also, is one IRA the same as another and one Roth IRA the same as the next? IOW, do different banks have different rates of return on an IRA and would it make sense to shop around for one?

You absolutely want to shop around. Different institutions treat you different ways. And offer different investment vehicles within IRAs, too.


What about the edwardjoneses of the world? I'm sure they must have some good ones, but most of the folks at those shops that I've encountered that work there mostly seem like snakeoil salesmen/women that took a 3-week course on how to talk me into writing a big check.

I really strongly recommend learning a bit about the market yourself. The basics are not difficult, and you won't lose significant chunks of your nest egg due to broker/maintenance charges like you will if you hire a pro.

(Also, one of the main reasons this is suggested is that the vast majority of pro's who work with the kind of money you're going to be investing aren't much or any better than a layman -- if they were, they'd be managing much larger accounts.)

[SanJoaquinSooner]

Open a Roth IRA at either

http://www.fidelity.com

or

https://personal.vanguard.com/VGApp/hnw/home

READ, READ, READ.


Go for a couple of diversified stock funds.

[Jerk]

Ammo.

It has been doubling in price every year since 2005.