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Old 02-17-2011, 02:00 PM   #21
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You've gotten great advice so far. Here's one more piece: if an organization called First Command ever invites you to a free dinner/investment seminar, decline. They're into "financial planning" for the military but will try to put you into vehicles (investments, insurance) which are much more expensive than what you will get with TSP, Vanguard, USAA, etc.

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Old 02-17-2011, 07:51 PM   #22
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Originally Posted by jerome len View Post
...have 3 months of living expenses set aside...
This advice I have ignored since being commissioned. With the steady and reliable paycheck that the military has provided me over the past 13 years, I don't see the need to keep a 'rainy day' fund. Should some emergency pop up, mutual funds can be sold fairly quickly to cover a credit card bill. However, I do my finances a little different from the average joe, and I have a different goal, too. And it doesn't include working for the man after my Navy time is up.

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Old 02-18-2011, 09:54 AM   #23
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Originally Posted by junior3042 View Post
Wow, thank you all tremendously for your responses. I sincerely mean that. Nords-so if you were in my shoes, you would first max out the TSP @ my current allocation and then when I get promoted with the addition $, contribute to a Roth (500 index fund) and change my TSP allocation to mostly I and S. I wish I had your head knowledge. You must be retired mil and FIRE'D! Thanks
You're welcome! We military on the board enjoy helping out each other, and I enjoy writing. I was commissioned in 1982 and I've been ER'd nearly nine years.

In your shoes I'd max out the TSP. It doesn't offer active management or commodities or other exotic assets, but you don't need to care about that. Once you have the excess income (from annual pay raises, or biennial longevity raises, or promotions) then max out your Roth IRAs. Once you max those out then keep saving in taxable accounts with fund companies like Fidelity, Vanguard, or Schwab. (Each company has their advantages and drawbacks.) As you contribute to your accounts, keep an eye on your overall asset allocation (to make sure it stays near your chosen guidelines) and use the TSP for the asset classes that tend to have higher expense ratios-- "I" and "S" funds.

You'll be saving for other reasons-- replacement vehicles, perhaps a home purchase, maybe a kid's college fund. The trick is to keep aggressively saving, especially by banking 80-100% of every pay raise or promotion. Have a little fun with a little of the "extra" money, but don't expand your lifestyle with words like "bigger" or "more" or "new" unless it really meets your values.

It seems like a long way from where you're standing, but compound interest accelerates exponentially after the first 5-8 years. Many of us didn't figure out saving & investing until we were in our 30s, too, which is a more painful road to ER. Keep saving and don't get distracted by "get rich quick" hype. You don't have to be an investment guru unless you want to be one.

I haven't always been a saver or an investor, but the submarine lifestyle doesn't offer many spending opportunities... and getting married really motivated me to make sure we didn't fritter away our cash flow. (You can read more of the details on my profile here and at Nordman, Doug) Use our experience to avoid wandering around in the investment jungle before you find your own path. "The Military Guide" will be in exchanges by August (I'm proofreading the galleys now) but most of it is excerpted at You can post questions there or on this board, read a few books from the recommended reading list, and put the saving/investing process largely on autopilot.

As Hawkeye has mentioned, the board's servicemembers & veterans will point out the military differences from the "conventional wisdom" of investing. A steady military paycheck lets you be a bit more aggressive in your asset allocation and with your long-term investments. If you were leaving active duty then you'd get a bit more conservative.


The book written on, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
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