I am contributing about $250/month to my TSP, and $100/month to my Roth IRA that JP Morgan Chase manages. Is that a sound game plan to diversify my investments? I've read that the TSP is the cheapest way to invest right now, and while I'm in the military I should take advantage of it. The thing is I've read plenty of good arguements why a Roth IRA is better. I've been contributing to both for about 11 months now at the rate I've posted above.

I'm an E-3 in the USAF, and I don't spend much at all. Well I don't make a whole lot either, but I want to start off on the right path to help secure my retirement. I don't know how long I plan on staying in the military so I'm working on my degree right now. I've also only been in since April of 2006 if that makes any difference.

Contributing to a TSP/Roth IRA is a great start. As to weather or not it is sound is based on your financial goals which were not articulated.

I would question why your investing your Roth IRA with JP Morgan. Much better in my opinion to invest with a large mutual fund provider versus a bank. As long as your contributing consistently most fund types you would be investing in would have this type of flexibility.

'On Target'- Motto of 1/84 FA (LAR)

If this is part of your retirement game plan sure.

Do you also have money stowed away for short-term needs, so you don't end up tapping into either of these investments?

If you leave the Air Force to go on to do something else, your TSP can remain where it is to continue to accrue tax-deferred earnings. You don't have to touch your TSP until you are age 70½.

However,at any time after leaving the Air Force you may also transfer your TSP account to a traditional IRA (by requesting a single payment, then the transfer option on the single payment) and keep it tax-deferred. TSP also lets you transfer your balance to a Roth IRA, but the payment to the Roth is considered taxable in the year TSP does the Roth transfer.

You can also transfer your TSP account to a new employer's 401(k), and continue your retirement savings by moving it from one eligible employer plan to another as you change jobs.

IMO, you are doing better than most E-3s in your situation. Congratulations to starting off on the right path.

quote:

Originally posted by ajm184:
Contributing to a TSP/Roth IRA is a great start. As to weather or not it is sound is based on your financial goals which were not articulated.

I would question why your investing your Roth IRA with JP Morgan. Much better in my opinion to invest with a large mutual fund provider versus a bank. As long as your contributing consistently most fund types you would be investing in would have this type of flexibility.

'On Target'- Motto of 1/84 FA (LAR)

I don't really know what my financial goals. I put away about $1500 into a savings account in 2007, and I try to put in about $150 a month if I can.

I have 3 funds actually. They are Oppenhiemer, American Funds, and something by JP Morgan Chase. The first two were set up by my parents awhile back prior to my enlistment, and I figured it would be easier just to roll everything over to Chase to monitor it (even though I don't know what I'm looking at). They are fairly aggressive from my understanding, and as I get closer to retirement they'll become more conservative.

Financial Goals provide a roadmap to understanding a) what you need to put aside monthly, yearly etc. and b) inform you on an on-going basis your progress. As an example, my financial goal is to have 5 million in investments by the time I retire.

Not knowing what fund you have within Oppenheimer and American Funds, having a fund that tracks the S&P 500 index should be one of your first funds. Both Oppenheimer and American Funds have a number of funds that are highly rated, though American Funds have front end loads, and a load is something I would never do. If your investing your money, it is important to understand what you have and in general how it all your investmensts are working together towards your goal(s). Educate yourself on investing because you care the most about your finances, not JPMorgan.

'On Target'- Motto of 1/84 FA (LAR)

quote:

Originally posted by 11619727:
They are fairly aggressive from my understanding, and as I get closer to retirement they'll become more conservative.

Just curious here...

Is that a JP Morgan Chase targeted fund? Is it a Mutual Fund in Barclays that automatically rebalances?

If you have a chance to research, research for "DELETED". It is "DELETED." "DELETED" has very low expense ratio (0.1%-0.5%). Mutual fund tends to have higher expense ratio (1-2%). This expense can eat up your money in the long run. This expense is to pay the fund manager and its staff. But ETF may not be for you if you only put down $100/month. It makes more sense if you buy ETF $1200/year due to transaction cost.

If you have spare time to read a book
"DELETED" This is what we read in our Stock Market class at my university.

According to this book and other research, 80% of funds out there fail to beat S&P 500 index fund (500 companies made up of mostly large US companies + about a dozen non US companies). Historically, S&P 500 gives 10-11% in average annual return (some years may be up 30%, some may be down 30%, but overall, it is +10%/year)

Your C Fund of your TSP basically follows S&P 500.


Edited for content-USMCvet

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Hey boss that is not fair - you are advertising deleted

OK. Thanks John. I hope all is well. How about a case of beer?

quote:

Originally posted by Dave_M:
OK. Thanks John. I hope all is well. How about a case of beer?

Doing so-so, but better than I was.

No thanks, I don't drink, however, Birch Beer will do!

I have not seen that in years. Ginger Beer from time to time. Not allowed booze at all right now, and limited to 1 at a time when allow. Take care.

Hey you, John, Vet... What you deleted was a general information. That's like deleting the word "mutual" in a mutual fund. So I can't spell out ETF but I can say S&P 500 and mutual fund.... There's like hundreds of ETF out there just like there are hundreds of mutual funds out there. I don't think my statement benefit any specific fund (well, except S&P 500, but then again there are dozens of different funds that track S&P 500).

And regarding the book, fine, I won't say it.

Oh well, I was just trying to help. Not even sure if OP still reads this.

quote:

Originally posted by ST1982:
Hey you, John, Vet... What you deleted was a general information. That's like deleting the word "mutual" in a mutual fund. So I can't spell out ETF but I can say S&P 500 and mutual fund.... There's like hundreds of ETF out there just like there are hundreds of mutual funds out there. I don't think my statement benefit any specific fund (well, except S&P 500, but then again there are dozens of different funds that track S&P 500).

And regarding the book, fine, I won't say it.

Oh well, I was just trying to help. Not even sure if OP still reads this.

Re-post it then Sarwono, without naming the book.

Firat off, are you married or not? If you are not then you are doing a good job reducing your tax burden to the government. If you are married then you are going in the wrong direction. If Married and the sole wage earner in the household. then you should be shoving more into an IRA first. If you don't owe the government money then there is nothing to deduct from your tax burden. Apply all to where is appropriate. Get with an Acreditted financial counselor and proper tax adviser to make the right decision for YOU and no one else.


Jason
SSG, USA
See my profile for contact information

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