Fund Trader Pro, LLC
Chief Investment Officer
William 'Bill' DeShurko started in the investment industry in 1987, learning early the financial perils of bear markets during Black Monday (October 1987) when the DOW dropped more than 20% in a single day. That lesson has guided Bill's investment strategy ever since. During the "Tech Wreck"in 2000 - 2001, frustrated by the losses in typical "buy and hold/diversified" portfolios, Bill created the computer based algorithm used today at www.FundTraderPro.com. The strategy behind the algorithm was tested using data from 1972 - 2005 by Professors Samuel L. Tibbs and Stanley G. Eakins. The results were co-authored with Mr. DeShurko and resulted in the paper, "Using Style Index Momentum to Generate Alpha" that won the Charles H. Dow Award in 2007. The Charles H. Dow Award is the most prestigious annual award given for the best paper that advances technical analysis in the year. The award is granted by the Market Technicians Association, the home of the Chartered Market Technician® (CMT) Program, the preeminent, global designation for technical analysis.
His blog can be found at: www.deshurkoblog.com
Author of: "The Naked Truth About Your Money" a primer for the Millennial Generation and all new investors to help with making responsible financial decisions. Available at: https://www.amazon.com/Naked-Truth-About-Your-Money/dp/1592576508/ref=sr_1_1?ie=UTF8&qid=1485467128&sr=8-1&keywords=deshurko
Contributor to multiple financial news sites including; www.HorsesMouth.com, www.MarketWatch.com. www.Kiplinger.com, www.theStreet.com and more...
Bill is also a board and finance committee member for Homefull Inc. a non-profit group seeking to end homelessness in Dayton Ohio.
Managing Member and owner of 401 Advisor, LLC a registered investment advisor, since 2004
BA. Economics, University of Rochester
The opinions expressed are those of Bill DeShurko. Past performance is not a guarantee of future success. Consider all risks before investing and it is always advisable to consult with a professional before making investment decisions.
AI Marketing Video Bill DeShurko
Timing matters....a lot. However, taking advantage of that little tidbit of information is not so easy. Fortunately for you, when you put money into an investment on a regular basis, you are taking advantage of dollar-cost-averaging. For more information go to this link:
Simply, as the market drops you are actually accumulating more shares with a fixed dollar investment. When investing in funds, it is about share accumulation. Price will take care of itself over the long run
The $20,000 that you contributed to the Roth can be taken as a tax-free withdraw as you have already paid taxes on this amount. You didn't say what kind of taxes you owe, but if income taxes, you could contact the state or IRS and see if they would accept the $20,000 now and then make payments for the balance. This would at least spread out the tax penalty over several years, allowing the balance to continue to grow. If they don't agree they will probably require you to liquidate what you need from the Roth. But with penalties and interest, you want this resolved.
I worked overseas in Kenya for two years but was paid in US $'s so that part was easier.
I would suggest opening a local currency bank account to deposit your pay. This way you can pay living expenses without worrying about currency conversions. No different than what you do now. To save on transaction fees you could use this account solely for 12 months and then convert your remaining account balance to US dollars when you leave. If too much money to travel with, it can be wired to a US-based bank account.
If you have bills to pay in the US while you are gone, the easiest solution would be to have someone else pay the bills and you pay them back. The least expensive way, I believe, to send money from China to the US is still Western Union if that needs to be done. But you should spend some time looking at PayPal and Venmo to see if they do international transfers.
While intimidating now, once you are there, I'm sure there will be many other Americans in the same position that will help you out.
How about splitting the difference? Take $20,000 from your TSP and pay toward your credit card. I'm assuming with the lower balance your current minimum payment would be enough to actually pay off the card over time. You can use a loan amortization calculator to determine the exact length of time. You might qualify for a lower rate and raise your credit score by paying more than the minimum and having a lower balance. Plus you'll still have $25,000 in your TSP growing for retirement.
If you are changing existing stock and bond holdings to new stock and bond holdings, I would first be sure that you are in a fee account, not commission. And even in a fee-based account, you could be paying transaction charges on all those trades. Get an upfront estimate of costs to implement this strategy before moving ahead.
For the cash. Having that much currently in cash implies to me that you are a conservative investor. You are wise to think of using a dollar cost averaging strategy. However, I would suggest implementing over a 5 year period, not just one. A common strategy would be to invest using what is called a bond ladder strategy. Divide the $900k by 5 and invest 1/5 into individual bonds, or my favorite investment for this, ETF's with a defined maturity. 1/5 of your money will mature in each of the next 5 years. When the bonds mature, you can then decide on whether to move 60% into equities and reinvest the 40% into the ladder strategy. Or invest less in the stock market if it seems high, or go "all in" if the market has gone through a major correction and seems low. The proceeds from each matured bond can be put in the market over a 12 month period, as you suggested, to further reduce your risk of mis-timing of the market. This can be a little complicated but your advisor should understand exactly what I mean (he may not agree, but he should understand and be able to explain it to you in more detail)...if not, change advisors. You have a significant amount saved, in my opinion, you should be working with a knowledgeable advisor with significant experience, and ideally on a fee basis.
Congratulations on the excellent job you did of saving!