Snidely Whiplash
Recycles dryer sheets
- Joined
- Apr 12, 2009
- Messages
- 206
My son is currently a 24 year old 1st Lieutenant (O2) in the Army, single and with no debt. I have been encouraging him to invest as much as possible but still be able to have money to do things with friends and live comfortably. He doesn't drink and hates the smell of smoke so his fun activities are centered around outdoor activities and local attractions and not the "bar scene" (I guess that's contributing to him still being single, but that's a whole other story, LOL). He currently earns about $48k per year in base pay and another $14k in housing allowance (rent is only $750 per month).
I'm somewhat out of touch with todays economic environment (caring for a sick wife means my knowledge of the economy and market conditions centers only on grocery and medical care costs) and I'd appreciate some advice as to how others think he's doing. I don't want to push him to increase his contributions to higher levels if he's already doing great but want to keep him well ahead of the curve.
Current position:
No debt and an emergency fund of $8k (CD's and cash in checking account)
Roth TSP with a balance of approx. $30k (C Fund / S&P 500)
Vanguard taxable account with a balance of approx. $35k primarily in large cap blue chip stocks (KO, XOM, KHC, DIS, BRK-B, V, and SPY in nearly equal amounts)
Going forward:
He is comfortable with the amount of his emergency fund and will maintain that level.
His Roth TSP will continue to go to the C Fund and is set at 30% of his base pay (about $15k per year).
He is opening a Roth IRA at Fidelity and will be contributing $300 per month there until July when he will receive a raise and then will up his contribution to $450 per month. The Roth IRA will be investing fully in the S&P 500 index fund.
His Army branch deploys regularly and he spends very little during deployments. His last deployment one year ago resulted in a cash balance when he returned home of about $30k of which he invested $15k to the Vanguard account and used the balance for his emergency fund. The next deployment (probably mid-2018) will more than likely result in similar cash balance of which he will probably invest half (again in the taxable at Vanguard) and use the rest to fund vehicle replacement and continuing his education via an online Masters degree course.
Given the low tax bracket he is in a traditional IRA or TSP account seems to make little sense. I have also spoken with him at length about the 100% equity portfolio and he assures me he is comfortable without a position in bonds and is comfortable on the stock path he is on.
I'd appreciate any suggestions or advice anyone might have that I can pass along to him. I'm very proud of how he is doing (both personally and financially) and want to make sure I'm not missing an obvious avenue that he should be availing himself of to put him in the best position possible. I have forwarded him the Bogleheads Military Investing information as well as the Jack Bogle's little red book on investing. I don't make his decisions for him, but he does look to me for financial advice and I want to make sure I'm giving him the best advice I can.
I'm somewhat out of touch with todays economic environment (caring for a sick wife means my knowledge of the economy and market conditions centers only on grocery and medical care costs) and I'd appreciate some advice as to how others think he's doing. I don't want to push him to increase his contributions to higher levels if he's already doing great but want to keep him well ahead of the curve.
Current position:
No debt and an emergency fund of $8k (CD's and cash in checking account)
Roth TSP with a balance of approx. $30k (C Fund / S&P 500)
Vanguard taxable account with a balance of approx. $35k primarily in large cap blue chip stocks (KO, XOM, KHC, DIS, BRK-B, V, and SPY in nearly equal amounts)
Going forward:
He is comfortable with the amount of his emergency fund and will maintain that level.
His Roth TSP will continue to go to the C Fund and is set at 30% of his base pay (about $15k per year).
He is opening a Roth IRA at Fidelity and will be contributing $300 per month there until July when he will receive a raise and then will up his contribution to $450 per month. The Roth IRA will be investing fully in the S&P 500 index fund.
His Army branch deploys regularly and he spends very little during deployments. His last deployment one year ago resulted in a cash balance when he returned home of about $30k of which he invested $15k to the Vanguard account and used the balance for his emergency fund. The next deployment (probably mid-2018) will more than likely result in similar cash balance of which he will probably invest half (again in the taxable at Vanguard) and use the rest to fund vehicle replacement and continuing his education via an online Masters degree course.
Given the low tax bracket he is in a traditional IRA or TSP account seems to make little sense. I have also spoken with him at length about the 100% equity portfolio and he assures me he is comfortable without a position in bonds and is comfortable on the stock path he is on.
I'd appreciate any suggestions or advice anyone might have that I can pass along to him. I'm very proud of how he is doing (both personally and financially) and want to make sure I'm not missing an obvious avenue that he should be availing himself of to put him in the best position possible. I have forwarded him the Bogleheads Military Investing information as well as the Jack Bogle's little red book on investing. I don't make his decisions for him, but he does look to me for financial advice and I want to make sure I'm giving him the best advice I can.