Put your money where your mouth is

Yesterday was a decent Korean day and I’m getting better at putting the sentences I want together. The whole struggle has been about finding a way to cognitively distinguish Korean and Japanese in production.  They are so similar it has always felt like I could do more in Korean than I really could, which tripped me up and slowed me down. I’m not having any trouble with the new grammar on a comprehension level, so it’s just a matter of learning the vocab and getting use to producing it accurately.

Last evening I went to a financial planning seminar offered by the department.  I’ve always been maxing out my TSP contributions and have done some reading on different investment strategies but I wanted to get some feedback on whether or not the approaches I’ve settled on are reasonable. I’ve kind of hedged on all of my strategies: I put half of the money in managed L funds and then manually arranged the other half across an array of funds ranging from the conservative government bond G fund to the risky small business fund. I put most of it in the C fund which is basically an S&P 500 index fund. My understanding of the preferability of no-load mutual funds and index funds was confirmed, which was reassuring.

We’ve got a “Roth IRA” option in our TSP now too that I’m not entirely clear on. It appears that we’ve just got two options for investing in our TSP (which is our acronym for 401(k)): pre-tax standard deposits that are taxed on withdrawal and these new “Roth” deposits that are deposited after taxes but then tax free on withdrawal.  The advice that I got when the program was announced was essentially to bet on future taxes. If you think future taxes will be higher, pay them now and then get your money tax free later on. But it was also pointed out that $10 invested after paying taxes is the equivalent of $13 invested before taxes which provides greater principle for the magic of compound interest to work on over the life of the investment. This means that even if you’re paying higher taxes on it later on, you’ll have so much more money that you’ll come out ahead.

Considering that no one knows what’s going to happen to our tax rates in 26 years (I hope I can last that long!), I just split the difference and maxed out my contributions with half from standard deposits and half from Roth.  I know that retrospect will permit me to say I should have done one or the other but at least I don’t have all my eggs in one basket.

The big thing we messed up on was not establishing a 529 educational fund for the Eminent Child early on. If we’d started it when we got married (15 years ago today!), we’d be sitting pretty. Instead, we’re way behind the 8-ball and there’s no way we’re going to be able to pay for her education unless we basically save our entire income from here until she graduates high school (which is a long-winded way of saying there’s no way we’re going to be able to pay for her education). Some friends of mine were talking about trying to convince their parents to give gifts as 529 contributions and how that just doesn’t have the same effect as giving actual presents and gifts.  Something to think about when if I become a grandparent.

It was overall a good session. I had to leave before the discussion on insurance but I did get the presentation powerpoint and will look through it. Right now I’m paying for the best options and think I’ll stick with that. With my family history of heart disease and the state of my health (I’m fine, but plenty of warning lights in weight, blood pressure, triglicerides, pre-diabetic, pre-metabolic syndrome, cholesterol, etc), there’s reasonable odds we’ll need good health and even life insurance. Maybe I’ll be able to pay for the EC’s education in the end after all!

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