Investing in precious metals 101

Seeking advice: Choosing between these bad investment alternatives….

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  • Fri, Jan 30, 2009 - 12:46pm

    #1
    glen12

    glen12

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    Seeking advice: Choosing between these bad investment alternatives….

Those who have funds locked into the federal government’s equivilent to the 401(k) plan, the "Thrift Savings Plan", can only choose between the following investment options:

The "G Fund", which is basically a money market fund in which the nominal value of your principle is safe. 

The "F Fund" ,which replicates the Barclays Capital U.S. Aggregate index of corporate bonds.

The "C Fund", which replicates the S&P 500. 

The "I Fund", which replicates the MSCI EAFE Index of large cap foreign stocks.

The "S Fund", which replicates the Wilshire 4500 smaller cap stocks.

Obviously none of those choices fit into the "Crash Course" world view.  But those are the choices.  No rolling into a self directed IRA while still employed.

Obviously I have opinion about the least bad alternative, I would appreciate the thoughts of the wise people on this board. 

 

  • Fri, Jan 30, 2009 - 12:58pm

    #2

    cat233

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    Re: Seeking advice: Choosing between these bad investment …

glen 12,

If I HAD to choose, the "G" Fund.  That is the safest until of course the dollar declines…. Are you sure this all you have to choose from????

Can you quit contributing?  Park what you have in the "G" Fund and start buying gold?

Cat

  • Fri, Jan 30, 2009 - 01:03pm

    #3

    Mike Pilat

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    Re: Seeking advice: Choosing between these bad investment …

If you’re truly looking for a long term solution, you can’t do money market or bonds. Bonds will eventually crash and burn. When faced with a similar selection, I went with the MSCI EAFE.

I did it because there are at least some foreign countries that I don’t think will end up completely shafted by this. Further, the fund diversifies between different countries, which is very important. There is no way that I would feel comfortable locking all of my retirement into any single country at this point. 

I used to contribute a lot more to retirement accounts, but now I pretty much only contribute what will be matched, and even then I have misgivings. I think retirement accounts could be targeted for wealth confiscation and I would rather have at least some of my wealth completely out of the banking system. It really just depends on what your goals are and what your beliefs about the future are.

Choosing the "best" fund available but not having invested any time in sustainable knowledge or any FRNs in gold and real capital would leave you pretty exposed in my opinion. I hesitate to say much more, because A) I don’t want to pretend to have a crystal ball and B) It’s a personal choice that you will need to make after evaluating your temperament, obligations, goals, beliefs, etc.

Mike

  • Fri, Jan 30, 2009 - 01:20pm

    #4

    cat233

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    Re: Seeking advice: Choosing between these bad investment …

[quote=Mike Pilat]

If you’re truly looking for a long term solution, you can’t do money market or bonds.

[/quote]

The only long term solution to making money is to be market neutral and make money up and down or even in a sideways market. … And then decide what you do with your profits.

Cat

  • Fri, Jan 30, 2009 - 01:26pm

    #5

    Mike Pilat

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    Re: Seeking advice: Choosing between these bad investment …

Cat: Agreed, I said what I did given the lack of selection and control over these choices. Likewise, I should be clear in saying I made the assumption that this was a retirement account that was not going to be very "actively" managed by the owner…

As for profits, those are one of the ultra evil vices of free markets and capitalism, right?

  • Fri, Jan 30, 2009 - 01:35pm

    #6

    cat233

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    Re: Seeking advice: Choosing between these bad investment …

Mike,

LOL… The profits give you choice… To buy land, pay off debt, buy gold, donate the proceeds, make the necessary preparations for "doom and gloom."  Smile

And… That is the problem… "ACTIVELY"  manged.  It is your money, no ones cares about it more than you and it should be actively manged by you.  You know I don’t believe the, "I don’t have time"  scenario… For every person who says "I can’t"… there is another who says, "I can" for the same reason.

  • Fri, Jan 30, 2009 - 01:44pm

    #7

    DavidLachman

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    Re: Seeking advice: Choosing between these bad investment …

[quote=Mike Pilat]

As for profits, those are one of the ultra evil vices of free markets and capitalism, right?

[/quote]

Hi Mike,

Actually profits have been around since well before capitalism, in fact without the capital accumulation in feudalism, capitalism couldn’t have been started.  Hopefully capitalism would yield a positive benefit to society as a whole by individuals acting in their self-interest.  Lately, it doesn’t look like that theory was correct, at least in the banking sector and large corporations.

As for the investment question,

Truely the investment choices look bad.  Is there an early withdrawl with penalty option or a clause for a hardship withdrawl?  It might be worth taking the hit now and preserving what is left in an investment of your own choosing.

  • Fri, Jan 30, 2009 - 01:54pm

    #8

    Mike Pilat

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    Re: Seeking advice: Choosing between these bad investment …

Yeah, these prepackaged retirement deals are bothersome, if for no other reason than they limit my control. You basically pay a "control risk premium" for the bonus of having a company match your inputs, if that makes any sense.

David: You are absolutely right, I was just making a jab. It is sad to see that we really don’t accumulate profits here in America. They are just inflated paper for the most part lately. There are some really, really critical reasons to accumulate profits, whether they be from investing / trading, simply saving excess money from income, or from running a small business.

In one of his more respectable moments, Greenspan put it quite concisely: "Without savings, there is no future."

  • Fri, Jan 30, 2009 - 04:44pm

    #9
    glen12

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    Re: Seeking advice: Choosing between these bad investment …

Thanks for your insights.

I actually have been fully invested in the G Fund, which has – despite the dollar’s fundamental flaws – ironically benefited during this "Great Deleveraging".  At the same time, I have been slaughtered in my taxable accounts which are heavily invested in energy and precious metals holdings. 

 In the fullness of time, the dollar’s weakness will manifest itself  – and I fear that it will manifest itself swiftly and violently.  I guess my preferred next option would be to begining moving some $$ over into the foreign stock fund on big dips, just to hedge against dollar weakness.

But it’s ahrd to feel very good about any of those options.  

  • Fri, Jan 30, 2009 - 05:08pm

    #10

    Nichoman

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    Re: Seeking advice: Choosing between these bad investment …

@glen12

Federal employee as well.  This past May transferred to G.  Have stopped contributing to TSP because…

1.)  Doubt TSP will be solvent/available within 5 years (reasons that have been discussed).

2.)  Because of limited, poor options, putting any further savings in IRA’s and private (most flexibility, options).

Remember 2 options toward taking money out of TSP…if either fits your situation (can read/research  on line).

Hope this helps,

 

Nichoman 

 

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