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The most popular Products mentioned in /r/MilitaryFinance:
The most popular Services mentioned in /r/MilitaryFinance:
Schwab
Morningstar
The Motley Fool
Slickdeals
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The most popular reviews in /r/MilitaryFinance:
I mean, it's a math problem, not an opinion piece. Factor in taxes and the higher expense ratio and see if TRBCX comes out on top. Comparing the returns of the two, they're pretty close for in terms of returns (that's for both the last 10 years and since inception.
You don't have to take anyone's words for it. Look at historic difference in returns between the two and if TRBCX comes out ahead after factoring in the tax burden.
The first thing I would recommend would be to go to the library, borrow from a friend, or download the book Total Money Makeover by Dave Ramsey. While his investing advice is criticized by some, his "get out of debt" plan has a very high success rate. I used the book and got debt free (minus the house) during my last year of AGR. Essentially, his advice is to stop ALL contributions to retirement (TSP) during the process of becoming debt free. This helps free up money and keeps you vested in the plan. Next, you put $1000 in to a savings account to use as your emergency fund. I use Barclays Online Savings, which has a rate of 1%. It is not linked to my general account, which keeps me from just going to an ATM and taking it out when I want to buy something stupid. Next, list all of your debts from smallest to largest amount owed. Do not take the interest rates in to account. Then you begin a "debt snowball". Pay the minimum balance on all accounts EXCEPT for the smallest. Throw every extra dollar that you have at that smallest account. Once that account is paid off, move on to the next smallest, and so on and so on. Once all of the debts are paid off, then you start throwing money in to your emergency savings account until you have 3-6 months of expenses in it. Once that emergency account is funded, then you start contributing to retirement. Next step is funding kids college.
That's just a quick synopsis of the Total Money Makeover, but I do recommend picking up a copy and even listening to Dave's podcast. It is a quick read. If you follow these steps, being debt free is within reach.
Obviously, start contributing to the TSP if you haven't already. I would open an online brokerage account. But please, for your sake, research and read as much as you can about investing before putting any money into something. I highly recommend reading The Intelligent Investor by Benjamin Graham. It teaches many valuable lessons.
Find a roommate. Bike to work. Live close to work. Start a side hustle. Drink at home. You need car insurance if you have a car. You need renters insurance if you own expensive stuff you can't afford to replace. You need life insurance if you have dependents to support.
Earlyretirementextreme.com Mr. Money Mustache The Millionaire Next Door
yes you can withdraw from your roth ira but there are rules if you don't want to pay taxes. It's not the ease you make it out to be in pros.
https://www.schwab.com/ira/roth-ira/withdrawal-rules
If you are saving for retirement then you should be ok with no being able to touch your money until retirement. If you want money you can easily access at any time you could just open a regular brokerage account.
First thing's first, I'm assuming you are fairly young being an E-3. I wish I had reached out for advice when I was your age but I was young a dumb and blew every last dollar I made. I am in my 30's and am just now starting to concentrate on retirement. If you haven't read Dave Ramsey's Total Money Makeover you need to. I don't always agree with all of his advice but I have done almost all of them and I can tell you I am debt free except for my house (I'm working on that now). The most important thing you can do though is read. Read every book you can get your hands on, r/personalfinance is a great place to ask questions and read other's people situations. A lot of people have a hard time discussing money with others and asking now is a great step. Here is a quick rundown of what Dave Ramsey says:
- Baby Step 1 – $1,000 to start an Emergency Fund
- Baby Step 2 – Pay off all debt using the Debt Snowball
- Baby Step 3 – 3 to 6 months of expenses in savings
- Baby Step 4 – Invest 15% of household income into Roth IRAs and pre-tax retirement (TSP for you and I as well as IRA's if possible)
- Baby Step 5 – College funding for children
- Baby Step 6 – Pay off home early
- Baby Step 7 – Build wealth and give!
Don't be afraid to live like nobody else so later you can live like nobody else.
Feel free to PM me if you want to discuss it further and in more detail.
I use Vanguard for my IRA and Schwab for my taxable account. Having it at the same place would simplify things though.
Schwab has the AMEX Platinum Charles Schwab card which gives small bonus when you redeem rewards via deposit into the Schwab Investing Account. Card fee is waived for mil.
E5 also means grocery bills, Internet, utilities, and everything else that getting an apartment entails. If you've got a big goal you're saving towards (real estate down payment for your multiple streams of income?) consider getting a roommate to split expenses. Learn to cook and commit to doing it. ( /r/eatcheapandhealthy, /r/mealprepsunday, /r/slowcooker, and Google OAMC).
Start researching investment topics. The Intelligent Investor was updated by Jason Zweig and will teach you the fundamentals if you really want to buy individual stocks. Otherwise, get a Vanguard account and choose an assortment of nice, no load mutual funds.
Finally, just for shiggles, head down to the finance people at ACS, Fleet and Family Services, or whomever provides social support functions for your service. Take your budget and your plan and chat with them. See what they have to say, take the literature, and read it critically.
You admitted to having minimal knowledge on accumulating wealth so my advice is to get some books and start learning. Like it was previously mentioned, you're on the right track already and well above your peers, but don't get complacent and keep pushing yourself. I recommended The Four Pillars of Investing to sink your teeth into. It also helps to set specific goals to work towards to keep you on track (i.e. Trip fund, home down payment fund, new computer fund). Good luck on your financial journey!
This is a great book for getting started. It has some investing advice in it.
The Simple Path to Wealth: Your road map to financial independence and a rich, free life https://www.amazon.com/dp/1533667926/ref=cm_sw_r_cp_api_i_KKY2E2DBYX3P780DSJRE
Investing is a method to put money aside while you're busy with things in your life and have that money work for you so, that you can take advantages from that money and if you want to start investing you have to follow some rules about the investing and gain knowledge as much as you can. I personally use the "Stock Advisors" app which enables you to start investing in the Stock Market.
Dude. Roth IRA has some exceptions.
You can withdraw contributions anytime since they were already taxed. Earnings cannot be taken out because they were earned tax free.
Two types of IRA, Traditional and Roth.
In a traditional the money you put is not taxed (unless you make 100k a year or more) and earnings are not taxed. Only when you withdraw the money out you are taxed.
In a Roth, you are taxed on the contribution. The earnings are not taxed and neither is the withdraw. Since you were already taxed on the contributor you can withdraw them. Here is an actual bank saying the same thing
https://www.schwab.com/ira/roth-ira/withdrawal-rules
> Age 59 and under > You can withdraw contributions you made to your Roth IRA anytime, tax- and penalty-free. However, you may have to pay taxes and penalties on earnings in your Roth IRA.
It isn’t recommended to withdraw your contributions from your Roth but can use it in am emergency.
I am not an advisor but if you believe that the US economy will keep growing year after year open a Roth and put in SPY, VOO or some other broad based ETF. There are also target date retirement funds, like there are in TSP. Lastly there are many options for low-risk investing, there are “low risk” ETFs or fixed income securities ETFs.
If you are crazy put it in a 3x leveraged S&P 500 ETF. If the S&P goes up 1%, you go up 3%. But the reverse is true too. You can easily lose 50% of your money if the S&P drops like 17%.
You need an eligible Schwabb account for this card: https://www.schwab.com/credit-cards/platinum-card
There are many blogs for AD military credit cards with lists. My personal favorite are the chase sapphire reserve, Amex platinum and gold, and chase Hyatt card.
I don't have them on hand, but you can call the Delta military desk or the Southwest military desk. They occasionally have air fare cheaper than any published rate. One time on Delta, the tickets were $400 for my trip and the military desk sold me the same exact tickets for $220.
More importantly, look into the premium credit cards with their fees waived for military (Chase Sapphire Reserve, Amex Platinum, Citi prestige, etc). They all have travel credits ($200-$300 each) and additional perks.
Citi is 4th night any hotel free, Amex has too many to mention here, and CSR has 1.5x points on travel. If you apply now and spend/churn 4k in 3 months, that is $750 free in travel.
Also, for Amex, you can attempt a massive status match for some interesting deals.
For instance, with Amex Platinum, you get Hertz gold, SPC, Hilton Gold, etc.
With some of those, at times, you can match to Cruise lines middle tier or Casino tiers. You may have to challenge.
If you are mid Casino or mid Cruise, you occasionally get free cruise offers (excluding taxes/air fare).
Also, if you apply directly to casino membership programs, you may get interesting deals. For instance, I routinely (2-3 times a year) get offers to the Bilouxi Mississippi Casino that is essentially pay $50, get $50 in free slot play, round trip air fare, and 3-4 nights at the casino. And Bilouxi is <2 hours from New Orleans or other places on the Gulf coast.
Also, the best deals aren't always military only. Check https://slickdeals.net/travel-deals/ or similar websites for flash sales or other travel deals.
Yep seems like a clear cash grab.
Steer clear of that one and pick up Doug Nordman's Military Guide instead. https://www.amazon.com/Military-Guide-Financial-Independence-Retirement-ebook/dp/B005AU15EU
If you really need to take it out, have a look at this blog post: https://www.madfientist.com/traditional-ira-vs-roth-ira/
Bottom line, you roll the TSP into an IRA and then do a Roth conversion on the IRA. You will have to pay taxes on it when you convert to Roth, and you'll have to wait five years after the conversion before you can remove that money (called a seasoning period), but then you can take it out penalty free. Check Rule 2 at this link for more details on the seasoning period: https://www.fool.com/retirement/iras/2014/08/13/the-2-toughest-roth-ira-rules-explained.aspx
This is timing the market. You may get lucky or you may not. You have no additional information that anyone else has. If you are a buy and hold long time horizon investor, this does not fit your strategy.
Markets usually do fine in election years: https://www.schwab.com/resource-center/insights/content/stock-market-performance-presidential-election-years
You have to have earned income to contribute to any IRA. Even if it's non-taxed, it could still be considered income. You have to have at least $6,000 of earned income to contribute.
Are you married? If your spouse earned enough money and you file jointly, then you can also contribute to a IRA.
You can use the 529 for vocational school, trade school, 2-year university, etc. In many cases I believe you can also transfer the 529 to a different beneficiary - including yourself.
​
https://www.schwab.com/resource-center/insights/content/529-account-what-happens
Your contribution amount can be withdrawn immediately after transfer to a Roth IRA. Earnings have to be left for 5 years (or rolled into an IRA that's already existed for 5 years) and withdrawn after age 59.5 in order to be tax and penalty free.
Here's a couple of articles that talk about the process:
https://www.schwab.com/resource-center/insights/content/can-you-rollover-roth-401k-to-roth-ira
I think this is not well known because Roth 401ks/TSP are still relatively new types of accounts and the heavy savers who are planning on early retirement are often also high earners who prefer to make traditional 401k contributions.
To start, I would strongly suggest a phone call to DFAS Customer Service regarding the banking question. Be prepared to spend a significant amount of time on the phone.
Transferring money out of the states does require a fair amount of paperwork. You could do an overseas wire transfer from Ally or Schwab.
As to TSP contributions.
"While in retirement from Government service, you can no longer make contributions to your TSP account, take out TSP loans, or request in-service withdrawals. Also, all court orders against your TSP account must be resolved before you can make a withdrawal."
https://www.tsp.gov/LifeEvents/career/enteringRetirement.html
As to your IRA - you can only contribute earned income, and that does not include pension income.
Any answer we give the tax question would be a guess at best.
Every state has a different "test" to determine where you should pay taxes. For example, it is common for people to have residences in both New York and Florida. New York tries to claw back taxes when people do this and claim Florida as their state of residence. The test New York uses is where do you keep your pet and what state do you use for health care and/or education. I have no idea what California does.
You would do well to consult a California tax attorney. I would seek out a tax firm that has offices in both California and Nevada, and explain your situation to them and follow their advice.
I just opened my account, and requested to transfer some money into my new account. I have no clue what to do next. Can I just use the money to buy mutual found " <strong>SWYHX</strong> Schwab Target 2045 Index Fund "? I am 35 years old, I feel like 2045 should be a good year to start withdraw money. I don't want to actively control the money.
Schwab portfolios are already adequately diversified. You can see the details here.
You have diversification across all major asset classes; Equities (stocks), fixed income (bonds), real estate, and cash.
Your equities have diversification across all major markets and countries. Schwab 2060 holds equity in U.S. stock, along with developed countries like the U.K., Germany, Japan, Australia. It also holds equity with emerging nation's like Russia, China, India, and several others.
Your equities also have diversification across all major sectors of industry, from utilities to technology.
Your fixed income has diversification across markets and ratings; holding both treasuries and commerical from AAA to BBB.
All of this is based on the weightings Schwab has found optimal based on their research, most of which is made public in the form of white papers you can find on their website. The quality of information is much higher than what you'll find from most redditors. It's also insanely cheap and requires you to do nothing but be patient.
Investing into sector funds or individual stocks is entirely foolish compared to what I've outlined above. You might as well take it to a casino and bet it all on black.
If you're greatly interested in finance, check out the reading list in the sub wiki, it has recommendations for beginners and those who already have a solid grasp of the basics. Once again, quality will be much higher than what's in this thread, I'm pretty disappointed with some of the comments.
So one of my mentors passed this book onto me that I thought was super helpful. Granted, I’ve been involved in RE for ten years, but it really opened my eyes out to the investing possibilities long distance and helped me set a plan moving forward for the remainder of my military career.
https://www.amazon.com/Long-Distance-Real-Estate-Investing-State/dp/0997584750
I’ve heard the horror stories of Seattle and see the impacts of a lot of Californians moving in my home state as well. Man, 100k over asking is nuts!
> OP, pick up a couple military retirement books written by former SGMs or COLs.
Lol, or pick up the book written by the commentor you replied to.
It’s less of a concern for people retiring vs separating. A lot of people assume you can use GI Bill benefits to qualify for a mortgage, and are surprised when you can’t. But your pension absolutely can count; and there are a number of alternative underwriters that will issue a policy based on existing assets; even if it’s a little outside the norm.
Good on you for trying to learn!
Read this
It's a simple book and puts all the typical financial information. It's a lot of common sense stuff, but its only 200 pages.
Focus on getting through UPT first. It's not easy. Set up your TSP after commissioning and start with 10% contribution to the L2050 fund.
After you hopefully get through UPT, most important thing to do at this point in your life is education. Start reading A Random Walk Down Wall Street, I Will Teach You To Be Rich, The Millionaire Next Door, Bogleheads Guide to Investing, The Bogleheads Wiki.
Be aware of the risks, rewards, and work required to make money with real estate. I found it to be much too stressful and cost too much to be worth my while, but others like it and have found success. Others have found failure too though so do your due diligence. Index investing for me is the right level of risk, reward, and stress free living, but to each his own.
Personally, I just focus on my job as an officer. Once you make captain the pay is pretty good and you should be able to sock away a good chunk of your income for financial independence.
Hey, I highly recommend Dave Ramsey's "The Total Money Makeover." His process is I think 7 steps and it tells you exactly what to do with your money. It is awesome and changed my thinking of money. We used to borrow for the stuff we wanted, like cars, but now we will never borrow again(with the exception of a house).
Wow. This beats out my budget sheets. My girlfriend developed ours from the Dave Ramsey sheets in his Total Money Makeover book. That's worked really well for me. But, sheesh. I'm going to be looking to see if I should replicate your sheets. Congratulations.
Haha I like your attitude!
Great question about the books to read. I recommend Robert Kiyosaki's Rich Dad Poor Dad, as well as Think and Grow Rich by Napoleon Hill if you're really serious, followed by The Magic of Thinking Big by David J. Schwartz.
My opinion about savings is fairly simplistic: it doesn't matter as long as you have 1 years worth of your personal lifestyle saved and accessible should the worst happen. Savings and pockets of money mean very little to me (personal opinion) when compared to the power of passive income streams.
As a crude example, let's say you first started a youtube channel that becomes profitable (credibility), then teach and manage 10 others' accounts, taking a small percentage as compensation, and then after that you hire a manager to continue the work for a lesser percentage than your own, thus absolving you from any work, but still generating passive income. From there you could simply network out and refer people to your management system. That's a business system in all its crude simplicity. Create multiple systems like that and before you know it you're set for life, and most likely for your family's lives.
In conclusion: cash is king, but kings come and go. You want to control the cashflow, because then you control when and where the cash comes and goes (:
I always recommend Nords book, as a primer, then decide if someone else has your best interests at heart when they recommend something, all proceeds from his book are donated to charity.