First off thanks for reading and helping out, I’m not much of an experianced investor.
A little about me, I’m 20 I signed on as an enlisted marine at 17 and have been selected for mecep which is a program that enables an enlisted marine to serve at a civillian college earn his degree and then be commisioned as an officer. So I am not an officer at this time but it is my abitious goal.

I have decided to invest 30% of my income into 3 funds, retirement, home, and general. I plan to retire at 45 with my military retirement and carrying me through.

I know I cannot rely soley on an ira being that I cannot use that until I am 60 to 65. I need an investors advice I know the basics of investing and the thought of paying ever rising capital gains tax on that large of a sum of worries me.

Thanks again, and semper fi.

 

  • ComplicatedConundrum 1:07 pm on March 5, 2010

    Congratulations of your choice to serve. I just finished 20 years myself.

    First, don’t plan on 20–circumstances may change that. Second, I do recommend you contact FirstCommand Financial Planning. They can set up an investment plan that meets your goals. (There should be an office near each military base.)

    The advice I got was to max out what you can in a tax-free investment such as a Roth IRA. Keep enough in savings (or liquid investments) for 3 months bills. (However, my recent experience says to make this a *6* month savings.) Finally, keep enough insurance to take care of your family. SGLI is the best deal going, and when you retire go with the SBP (NOT VGLI).

    Good luck!

    William
    http://dealchalet.com

  • Lauren F 1:07 pm on March 5, 2010

    There are so many variables to consider, especially at such a young age. I would recommend you schedule some time with a certified financial planner (look for one at http://www.cfpnet.org). It might cost you a couple hundred dollars, but for a decision this big, you should get some expert advice.

    Some answers they will want to know (think about these ahead of time):

    1. Are you supporting just yourself, or do you have a spouse/children to care for?
    2. What kind of retirement do you want – stay at home and putter around, travel the world, something in between?
    3. What kind of house will you live in, what area of the world, and if you want to own a house will it be paid in full?
    4. Are you all done with major life expenditures (children through college, weddings, houses, etc.) or if not, what do you anticipate those being and when?
    5. What sources of income will you have and when will they start (military pension, social security, part time job, IRA/retirement plan, non-retirement investment accounts).
    6. Do you need/want to leave an inheritance to anyone, or is it ok to plan to spend down all your assets during your lifetime.
    7. What will you have for health care in retirement (VA? Private medical insurance?)
    8. How much income will you need per month, and what do you think it wil be in the future due to inflation.
    9. Do you have an estate plan and legal documents that protect you in the event you are incapcitated or die – that is, a will, power of attorney, advance medical directive?

    Before you choose investments, it will help to start with a vision of how retirement will look. Typically, the CFP planner will want to be able to put things in a short summary such as: Jim, age 20, wants to retire at 45. His wife, Jane, age 19, works and contributes to a 401k plan. Jim and Jane believe they will live until age 85, and they would like an income equivalent to $45,000 a year in today’s dollars. He will be covered for medical care through the Veteran’s Administration, and his wife, Jane, will also have this coverage.

    At your age, I would put the most you can into the TSP (401k equivalent) and if you can spare more money for savings above that amount, open a ROTH Ira account with up to $5,000 a year. Both of these allow tax deferred/tax free growth, and if you leave them alone will grow substantially over time. Look into a term called "asset allocation" which is a strategy to spread your investments out over several different categories to reduce risk.

    Congratulations for thinking so far into the future and planning. There is a great book that changed my life and made it possible for me to retire in my 40’s called "your money or your life" by Joe Dominguez and Amy Robin. While I disagree with their advice on investing (I think they are too conservative) the way they approach budgeting, cost control, and planning for your future is great.

    Good luck and thank you for your service. Hope your tours of duty are safe.

  • Yorky 1:07 pm on March 5, 2010

    First, thanks for your service to our country. First, start a Roth IRA and put as much in it as you can. Second if your already have a regular IRA, convert it to a Roth immediately. Third, I would use Charles Schwab. I have been with them for 30 years and when you consider everything they are the best. The don’t charge any maintenance fees, are available with live people 24 7, and have excellent an computer systems with all the tools you could ask for. I would include their S&P Index fund as one of the funds along with a natural resource fund and one international fund.

  • Haze Gray 9:35 am on April 9, 2010

    Young Marine. I would avoid the first poster’s advice: “Second, I do recommend you contact FirstCommand Financial Planning”.

    First Command runs “Front Load” investment schemes, meaning that you pay hefty fees, even for IRAs. All of their “recruiters” are retired military officers who talk a smooth game and who will wine and dine you to get you to sign on the dotted line, but you have to ask yourself, “Who is paying for this meal and drinks?” the answer is the investors for First Command. Better off going with some low fee Vanguard mutual funds and take advantage of the VA Home Loan program to invest in some solid real estate. Buying houses around military bases is smart b/c you can always rent them out (hopefuly to people you trust) and when people don’t pay their rent you can notify their Chain of Caommand and make them pay.

    You should also max out your TSP to $16,500 a year to reduce your tax exposure. I’m a Navy LT with 6 years in and I’ve stashed away almost $300K by being smart with my money and volunteering for duty in tax-free and hazardous duty areas, and buying real estate with $0 down through VA. I plan to retire as an 0-5 at 44 and start a second career doing consulting and managing my properties. Avoid “front load” mutual funds at all costs, it’s simply throwing away your money to pay for some schmuck’s new Beamer.

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