Active Military Member seeking financial advice.

[TIPS N TAILS]

Greetings,

As the title states I'm an AD military member in the USAF. Currently been in 8 yrs and plan on contributing another 12 yrs to hit my 20. I'm seeking financial advice on getting my money to make money. Been reading some threads thus far. Looks like VG is the better route to go vs EJ should I want to invest in funds. I'm debt free, own some PMs and "try" to live within my means.

My questions is what would you recommend investing $10K in? Real Estate lots (NW FL), PMs, stock market? Totally clueless as what to do. I would be willing to tie up $5K 3-5 yrs in S&P 500. My risk tolerance concerning $5K is rather moderate-to high if that helps in determining.

I'd appreciate some sound advice from others. I know $10K isn't "a lot" but I thought instead of it sitting in a savings account I would rather invest it.

[REWahoo]

Rather than throw out investment recommendations, the best option we can give you is where to start learning to come up with your own investment strategy. There are tons of books out there on the subject - some good, many not. I like this online investment guide as it contains almost everything you need to know, it's relatively short and it's free:

Road Map for Investing Success

[cbo111]

Having retired from the AF ten years back, I can recommend that you maximize your contributions to TSP. You will be surprised how big the account will be in 12 years. Good luck.
regards, chuck

Quote:

Originally Posted by TIPS N TAILS Greetings, As the title states I'm an AD military member in the USAF. Currently been in 8 yrs and plan on contributing another 12 yrs to hit my 20. I'm seeking financial advice on getting my money to make money. Been reading some threads thus far. Looks like VG is the better route to go vs EJ should I want to invest in funds. I'm debt free, own some PMs and "try" to live within my means. My questions is what would you recommend investing $10K in? Real Estate lots (NW FL), PMs, stock market? Totally clueless as what to do. I would be willing to tie up $5K 3-5 yrs in S&P 500. My risk tolerance concerning $5K is rather moderate-to high if that helps in determining. I'd appreciate some sound advice from others. I know $10K isn't "a lot" but I thought instead of it sitting in a savings account I would rather invest it.

[target2019]

How about this really broad picture of the past?

https://public.dreyfus.com/documents...s/skyandex.pdf

If you zoom in to a random 5-yr interval, then another, you'll see how difficult to look ahead and make a prediction for you.

One time I went all in with 10K to Vanguard Energy Fund. A year later it was up, while other methods I was comparing were all down. Now that I think back, I did it for the same reason. Too much cash in 0% account.

I was lucky on that one.

When you do A/C preventive maintenance, is it random, or according to a well-planned schedule? I would go with regular investing intervals.

[Katiek]

Welcome! A couple questions that you should consider:

1. Do you have an emergency fund or would you need this money immediately if some emergency came up?

2. You mention tying up these funds for 3-5 years - do you need this money at that point or are you investing for the long term.

3. Are you contributing to your TSP? If not, and if this investment is for the long term you might want to use this money for living expenses and use your salary for your TSP.

4. Generally, I like a broad index fund, and at (what I estimate) your age, you can be more aggressive in your asset allocation. A total stock fund or target date fund could be appropriate. But if you need this money at a specific time in the near future, then you may not want an aggressive stock position because you won't know for sure what you'll have at that time.

The recommendation to start reading and learning about investments is a good one. You'll find a lot of good recommendations on this website, but you may also want to check out the Bogleheads wiki. .

[nash031]

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Originally Posted by cbo111 Having retired from the AF ten years back, I can recommend that you maximize your contributions to TSP. You will be surprised how big the account will be in 12 years. Good luck. regards, chuck

Almost 17 years AD, and concur with this. If you're not using your TSP benefit, you're making a mistake, IMO.

In your shoes 15 years ago, my goals were:

1) Eliminate debt (other than mortgage debt. Cars, HELOC, credit cards)
2) Build up to Max Roth IRA annually
3) Build up to Max TSP annually
4) Start taxable (brokerage) savings

Those goals haven't really changed even as I achieved 1, 2, 3 and raised savings in 4 over the course of time.

DW and I own our home, but do not presently pay down extra towards our mortgage. Two prior primary home ownerships are the extent of my real estate investing, with mixed results.

[DrRoy]

An investing book that I always recommend is Your Money and Your Brain by Jason Zweig.

[surferLife]

I'm at 21 years AD, looking to knock out 3 more then FIRE. Good advice is being given here... Emergency fund first, max out Roth TSP (I'm assuming you are in the 15% bracket), max out Roth IRA (Vanguard), and then if you have money left over after that, put in a taxable account. You can only put money into TSP from your base pay, so the money you have now I'd just put in a Roth IRA, if this is for retirement; you didn't specify your time horizon for the funds. Just as important as choosing where to put the money is your asset allocation, so you should read up on that. I'm a fan of the 3-fund portfolio myself. You may find these links helpful.

https://www.bogleheads.org/wiki/Lazy_portfolios
https://www.bogleheads.org/
https://www.bogleheads.org/wiki/Vide...ent_philosophy
https://www.bogleheads.org/wiki/Getting_started
https://www.bogleheads.org/wiki/Military_finances

[surferLife]

I'm at 21 years AD, looking to knock out 3 more then FIRE. Good advice is being given here... Emergency fund first, max out Roth TSP (I'm assuming you are in the 15% bracket), max out Roth IRA (Vanguard), and then if you have money left over after that, put in a taxable account. You can only put money into TSP from your base pay, so the money you have now I'd just put in a Roth IRA, if this is for retirement; you didn't specify your time horizon for the funds. Just as important as choosing where to put the money is your asset allocation, so you should read up on that. I'm a fan of the 3-fund portfolio myself. You may find these links helpful.

https://www.bogleheads.org/wiki/Lazy_portfolios
https://www.bogleheads.org/
https://www.bogleheads.org/wiki/Vide...ent_philosophy
https://www.bogleheads.org/wiki/Getting_started
https://www.bogleheads.org/wiki/Military_finances

Also, about doing real estate while being AD military. It's not impossible, but it's hard with the constant moving. Where I wanted to live 10 years ago is different than where I want to retire now. I've seen many military folk do the long-distance landlord thing, and it can be brutal on the finances. I've seen very few people that have been able to make it happen, so it's not impossible, but I would recommend against it unless it's your last assignment and you know you are going to retire in the area.

[Nords]

Welcome to the board, T&T.

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Originally Posted by TIPS N TAILS As the title states I'm an AD military member in the USAF. Currently been in 8 yrs and plan on contributing another 12 yrs to hit my 20.

One of the major regrets of my career was gutting it out to 20. I'd suggest that you take it one obligation at a time. Keep on going as long as it's challenging and fulfilling, but when the fun stops then be ready to make the transition to the Reserve/Guard. Don't just grimly clench your jaw and hang on for the active-duty pension. You'll risk your physical, mental, and relationship health.

The Reserve/Guard pension at age 60 still includes inflation protection and free healthcare, which are the most important factors. You'll still be able to achieve financial independence in your 40s on your own savings, especially because they only need to bridge the gap until your pension starts.

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Originally Posted by TIPS N TAILS I'm debt free, own some PMs and "try" to live within my means.

I don't recognize the acronym. What's a PM?

Quote:

Originally Posted by TIPS N TAILS My questions is what would you recommend investing $10K in? Real Estate lots (NW FL), PMs, stock market? Totally clueless as what to do. I would be willing to tie up $5K 3-5 yrs in S&P 500. My risk tolerance concerning $5K is rather moderate-to high if that helps in determining.

The first thing I'd do is maximize my contribution to my Roth TSP account. I'd boost my payroll deductions to it and live off the $10K until I'd maxed the Roth TSP.

Next I'd maximize my Roth IRA contributions, and then I'd try to save even more in taxable accounts.

However your "clueless" comment is an indication of a deeper issue: before picking any investments I'd decide on an asset allocation. Since you're in the military with a relatively stable income, you can afford to take more risk-- especially volatility risk. As other posters have mentioned, read about the basics and asset allocation and pick the one which works for you. Another starting point is the AA portion of the Bogleheads Wiki:
https://www.bogleheads.org/wiki/Bogl...g_start-up_kit
https://www.bogleheads.org/wiki/Asset_allocation

One example (suitable for active-duty servicemembers) would be 80% equities and 20% cash (high-yield CDs). (If you stay in the military long enough to earn a pension then you'll never need to invest in bonds.) If you're even more aggressive then you could go to 95%/5%. You could invest your Roth TSP in the C, S, and I funds-- or just default to the L2050 fund. In your Roth IRA and taxable accounts you could choose the equivalents of the TSP funds or just go with a total stock market fund.

The key is reading about asset allocation to the point where you're comfortable with your choices and sleep soundly at night. If you're not emotionally satisfied with your AA then it doesn't matter how logical your selection may be. Behavioral financial psychology will trump rational thought.

Quote:

Originally Posted by TIPS N TAILS I'd appreciate some sound advice from others. I know $10K isn't "a lot" but I thought instead of it sitting in a savings account I would rather invest it.

The best action you can take with the $10K is to invest it in an asset allocation that you'll be willing to keep for the next 10-20 years. Then you can automate your payroll deductions to your Roth TSP and your Roth IRAs, and send even more to your taxable accounts.

The real path to financial independence is not being a brilliant investor. A high-equity asset allocation using passively-managed stock index funds with low expense ratios will give you 99.9% of the market's return with about 5% of the effort. Once you set that up, you can focus on a high savings rate (low expenses and a higher salary). A 40% savings rate for about 20 years will get you to financial independence even without a military pension.
How many years does it take to become financially independent? - Military Guide

You can read "The Military Guide To Financial Independence And Retirement" at your base or public library. Much of the book is excerpted in the first six months of blog posts from the archives:
Post titles by month - Military Guide
Or just keep asking questions here.

[FI by 2024]

Everybody had given great advice. Nash's plan aligns perfectly with what I did and I'd recommend it. Nords also had some good words you should carefully consider.

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Originally Posted by TIPS N TAILS I'm debt free, own some PMs and "try" to live within my means.

All that being said, what worries me most is this comment. You indicate that at this time, you aren't 100% successful at living within your means. If I were you, I wouldn't be thinking about investing until I was positive I could live BELOW my means. Instead I would put that 10K away in an emergency fund. Investing is for when you have extra money, and you don't have extra money if you are not regularly living within your means.

If you meant that you are living within your means including setting money aside for investing, then maybe you are ready to invest. But I would call that living below your means, not within them. Be very careful of tying up money in a non-secure and/or long term investment if you aren't yet at the point where you can comfortably live without that money. The good news is military jobs grant us significantly more stability than most civilian jobs, so you don't need quite as much in your emergency fund as many others need. The bad news is RIFs are now a normal part of our lives, and I've seen some phenomenal Airmen lose their livelihood and end up sleeping on friends couches while looking or a new career.

Not trying to put a damper on the conversation, I just want to make sure you really are ready to invest.

[ExFlyBoy5]

There is great advice here, so I will not bore you with my opinions. However, if you notice Nord's signature line, he has an e-book that I personally thing EVERY SINGLE MEMBER of the military should be issued AND TESTED on when they get to their 1st duty assignment. So, I would HIGHLY recommend that you read " "The Military Guide to Financial Independence and Retirement"

Also, be wary of hanging until 20. Once I hit 15 years, I was convinced that I was going to stay (and why wouldn't you!??)...BUT...due to an issue out of my control, I *almost* got the boot just shy of 18 years. THEN...at the 19 year point, force shaping started...and a LOT of folks with 15+ years in got the boot. SO...it's no longer a forgone conclusion that 20 years is a guarantee. There are NO guarantees when it comes to dealing with Uncle Sugar!

[friar1610]

And if First Command ever does presentations near your base, do not attend.