Retirement

Should a Thrift Savings Plan be a Part of Your Portfolio

By on Wednesday, June 7, 2017

TSP or Thrift Savings Plan comes under the 401k plan of the U.S. federal government. In terms of participant account and investment balance, TSP is the largest among all 401k-like plans. In this article, we are going to find out whether TSP is actually suitable for your portfolio or not. However, in order to determine this, we will need to dig deeper and find out the pros and cons of this savings plan while also finding out some strategies to include TSP in your portfolio.

TSP or Thrift Savings Plan

Under the retirement plans of US federal employees, TSP forms an important one besides Social Security and The Federal Employees Retirement System (pension). Both the military as well as the civilian employees of the federal government are eligible for this contribution plan.  Both traditional as well as the Roth accounts are offered by TSP.

Benefits of Thrift Savings Plan

  • Expense ratios are low
  • The five L funds along with the other six core funds have an expense ratio of 0.029%, which is $2.90 on an investment of $10,000. Thus, TSP maintains the lowest expense ratios for the mutual funds.
  • No hidden costs or fees – There are no hidden costs or fees for investing in TSP
  • Wise selection of funds – Core funds of TSP include C fund, S fund, I fund, F fund and G fund which cover majority of the asset classes.
  • Lifecycle funds – The five core funds are maintained in different percentages that matches the Lifecycle of Thrift Savings Plan.
  • Covers your entire life – Even when you separate from the federal service, you can still keep the account active while including any retirement plans into TSP.
  • Civilian receive an agency match – The civilians coming under the purview of FERS retirement system are entitled to receiving an agency match.

 

Downsides of Thrift Savings Plan

  • Withdrawal Limits – You will be entitled to only a single partial withdrawal prior to giving you the opportunity to withdraw the entire fund. Thus, there are many people who move to the IRAs post retirement.
  • No conversions within the plan – You are not allowed to convert any part of your traditional balances into Roth Balance.
  • I fund is not that great – I fund is considered to be among the weakest of all the five core funds.

 

Conclusion

Thrift Savings Plan is great for the federal employees but is not considered great for others. Thus, if your financial planning includes TSP then you must weigh your options before putting in your money.

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Charts Graphics

Change Consumption Habits of Americans

By on Monday, June 5, 2017


The pictograph shows changes in consumption habits of the American populace for tobacco and alcohol.

In 1965 about forty two percent of the adult population smoked. This number decreased gradually over the next forty years at a rate of approximately five percent per year. The lowest percentage of smokers could be found in the year 2005, where twenty one percent of the population smoked.

Alcohol, on the other hand, has barely shown any growth or decrease, with the exception of two years; 1975 and 1985. In 1975 and 1985 the rates of alcohol consumption were ten point one percent and ten percent, respectively. This was a nearly two percent increase from the average steady rate of eight point four percent experienced in 1965, 1995, 2005 and 2008.

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Budgeting

Why Do People Think Mint is Bad For Budgeting

By on Saturday, April 1, 2017

One of the well known online budget and expense tracking app is Mint which allows you to track your money transactions from home without any trouble. Mint was formally introduced in September 2007. In November 2009, Intuit purchased Mint for $170 million. At the time, Mint had more than 1 million clients and was including a couple of thousand new clients consistently. After four years, Mint has more than 10 million clients. It can be used for checking your financial statements, savings, credit card bills, monthly and yearly incomes, future goals involving money, and funding for trips and hotel bookings.

Advantages of using Mint.com

  • As this is budgeting software, it notifies you every time you are due to pay a bill or payment which ensures you don’t end up being penalized for paying fees lately.
  • It helps to guide you in making the perfect financial statement for you bringing out every scope for you to spend and save as well.
  • You can keep a look on your daily expense and if you have a future goal of buying something, you can reduce your current spending according to it.
  • It is easily portable and you can track your money records through phone, tablet, laptops etc. So even if you are on a tour, you can track your transactions.
  • It keeps a track on your credit bills, home bills, savings etc for you.

Disadvantages of using Mint.com

Although the Mint.com has some great advantages but there are some disadvantages too which is making people lose trust over the app and ending up calling it bad software for budgeting.

  • There is not guaranteed security in this online software. com could get hacked and the cyber hackers can get hold of all your financial information. The only thing the hacker needs to do is get your password and to be honest, it is not that hard to get.
  • People don’t feel the necessity of an online finance tracker and they are good on their own.
  • They are more loyal users of other online budgeting sites like Quicken or YNAB.
  • There is sometimes a necessity of keeping a manual transaction record. Mint does everything through automated calculators but it sure has some flaws now and then causing you to lose track of your real money matters.
  • The site is full of advertisements of their credit cards and software. You would end up getting lost in them and being unable to put any digit in peacefully.

These are the basic reasons causing Mint to lose customers even though they provide quality service. If these issues are fixed soon they will be able to gain back their popularity as an online budgeting site.

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Tips

Life Triangle – Work, Life, and Salary – it is your job to balance it

By on Friday, March 31, 2017

In the connect world today everyone looks so busy to in connecting these three dots called Work, Life, and Salary. To have a good life you need good salary and for getting the good salary you need to have a good job, which demands loads of time at work. If you spend loads of time at work, then where is time for life? Are you in a similar situation? Are you still running every day to connect these three dots? Not able to balance? Confused?

Don’t worry you are not only one with this problem, most of us get into this problem. The main reason is we focus on one goal and forget other. The mantra to achieve balance is knowing you. Pause the run of the life for some time and do deep thinking on what makes you happy? Absolutely there is no one answer.  Once you know the key to your happiness, you can prioritize the three dots to get the right balance.

If you don’t achieve the right balance it will lead to poor work-life balance which results in stress, unhappiness, and even reduced productivity. Here is a quick tip for achieving happiness by creating the right balance.

  • Spend time to understand yourself: pause your busy life sometimes and write answers for the key question of life Who I am? Do I know myself? What makes me happy? who I want to be?. Keep scribbling until you land on the stable and self-convincing answer. Remember there is no right or wrong answer, every answer is right until you are convinced.
  • Priorities the key goals of life: Once you know who you are and what makes you happy, you will understand pathway for happiness? What is your number one priority in life?
  • If you can’t track you can’t progress: As now you have understood where you need to be, it is equally important to get the correct measurement of where you are today. Start measuring the time you spend on different aspects of life. If you can’t measure you can’t improve. This is not your exam result, so no pass or fail, measure genuinely
  • Analyze and reschedule your days: Now you understand where you spend more time, start planning your day and assign more time to activity in the path of your balanced life. Nothing changes in one day, have discipline and dedication.
  • Have personal time: have some time blocked for yourself. Spending time with yourself is most important. Keep revisiting your goals and reprioritizing tasks. Remember no multi-tasking during your personal time.
  • Influencers: Understanding yourself and measuring yourself will let you understand key influencers.
    • Example less sleep leads to less productivity and more stress. Less productivity means more time you spend in the office. This cyclic process leads to poor performance and fewer chances of promotions or higher salary.
    • Health, as everyone says health is wealth, poor health leads to poor performance and poor work-life balance.
  • Social life is important: Build good friends circle, family relationships and dedicate time for your social life. You need to draw energy from society, end of the day you live in society, positive circle creates positive energy.

Finally, it is your life; you live the way it makes you happy. Never forget it is all about Life balance.

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Saving

Save for the Days It Rains

By on Thursday, March 30, 2017

An emergency by its very nature will strike at the most inopportune of moments. And the greatest fear that tags along with an emergency are the lack of funds. It is to overcome and be prepared for such unforeseen challenges that one should have a substantial amount of savings in place.

Warren Buffet had once famously quoted: “Savings in not what is left after you spent on your needs but it is the first investment you make before you spend on anything else.”

In today’s time of financial uncertainty and extreme competition, health and wealth are both victims. And after a point in time, there comes a situation where falling back on reserves, however unwise that would be, become a necessity. Let us list a few of them to see why people need and emergency fund or in other words, a saving.

  1. A loss of a job is a reality. Companies will restructure, downsize or maybe right size and the first casualty will be you. What would you do in that case? Jobs will never come on a platter and hence expecting one soon after you have lost one is simply wishful thinking. Also, even if you get one, there is no guarantee the salary currently drawn will be as attractive as the previous one.
  2. You or a family member has an illness. A debilitating one at that too. Where do you think you will have the funds to help you or the member get treatment? Also being too sick can make you lose your job. You would then be in a situation explained in point number 1. In addition to which the cost of treatment will add up.
  3. That property tax which you knew was under control for a long time has suddenly been raised. While previously budgeting for the taxes, you had never ensured some extra buffer for the future and now the future strikes back. It is again the savings which will come handy.
  4. You have been downsized and your hours rolled back. You are now a part time employee with very little cash in hand.
  5. An accident is a rude shock. Can happen to anyone of us at any time. Hence we call it an accident. The money needed for treatment needs to be saved from the beginning.

There is a myriad of reasons for people to start saving. The list is long and exhaustive.

If you haven’t started saving, this is the time.

Start now.

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