My deployed soldier is coming home!
My deployed soldier is coming home!
My 20 year old son is coming home in 28 days after being deployed for 9 months somewhere fighting ISIS. He would like to invest around $50k when he comes home. I've been trying to read as much as I can on this site and a few others, as well as trying to read books that have been recommended. But I am still unsure on how I should advice him on what funds to invest in. Any suggestions would be helpful. Thank you so much in advance.
- Mel Lindauer
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Re: My deployed soldier is coming home!
First, thank your son for his service. Secondly, he can post here and he'll get all the unbiased (and free) help he needs.Randommly wrote:My 20 year old son is coming home in 28 days after being deployed for 9 months somewhere fighting ISIS. He would like to invest around $50k when he comes home. I've been trying to read as much as I can on this site and a few others, as well as trying to read books that have been recommended. But I am still unsure on how I should advice him on what funds to invest in. Any suggestions would be helpful. Thank you so much in advance.
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Semper Fi
Re: My deployed soldier is coming home!
As Mel said please thank your son for his dedication and service. It is much appreciated.
- cheese_breath
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Re: My deployed soldier is coming home!
The first piece of advice is to have him put it all in an online savings account or short term CD while you both explore the other options. Don't jump into anything you might regret later.
The surest way to know the future is when it becomes the past.
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Re: My deployed soldier is coming home!
+2ShiftF5 wrote:As Mel said please thank your son for his dedication and service. It is much appreciated.
The surest way to know the future is when it becomes the past.
Re: My deployed soldier is coming home!
Picking funds is the last and far from most important step, don't fall into the trap of thinking that's the important part. Stuff the money in a saving acct and then work out a plan; there is a suggested format to use for that on the wiki that he can use when he has cleared his head after he is back. This group is great for UNbiasis advice... and make sure he keeps away from the vultures that will no doubt contact him once he lands back home.
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Rob |
Its a dangerous business going out your front door. - J.R.R.Tolkien
Re: My deployed soldier is coming home!
Your son has access to the government 401(k) plan called the TSP (Thrift Saving Plan). It is excellent, read about it and study it.
He can always pull it out if he wants but he can't get back in if he leaves the service. Thanks for his service......Gordon
He can always pull it out if he wants but he can't get back in if he leaves the service. Thanks for his service......Gordon
Disciple of John Neff
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Re: My deployed soldier is coming home!
+3 For sticking it to them!, his dedication and service.cheese_breath wrote:+2ShiftF5 wrote:As Mel said please thank your son for his dedication and service. It is much appreciated.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: My deployed soldier is coming home!
As I understand it, he could have been sending money tax free to the TSP (military 401k like plan) while deployed. That way, the money goes in tax free and comes out tax free. It is hard to imagine he is not aware of that.
I do not know if he can now take his savings and have it put in the TSP, but if he can, that's the best place to put it. He needs to talk to his payroll people.
Here is some information on military finances that he might find helpful. There is a little information in there about pay while deployed.
https://www.bogleheads.org/wiki/Military_finances
I do not know if he can now take his savings and have it put in the TSP, but if he can, that's the best place to put it. He needs to talk to his payroll people.
Here is some information on military finances that he might find helpful. There is a little information in there about pay while deployed.
https://www.bogleheads.org/wiki/Military_finances
Link to Asking Portfolio Questions
Re: My deployed soldier is coming home!
Not an expert by any means, but I thought there were special financial opportunities for military while deployed.
Here's the first article I found when searching:
http://www.kiplinger.com/article/saving ... yment.html
Key points appear to include:
1) Savings Deposit Program - 10% guaranteed return
2) Higher Thrift Savings Plan Limits up to $50k / yr
3) Roth benefits
I'm not clear if these options go away immediately when deployment ends.
I imagine the soldier in question is busy with non-financial matters, but from am financial perspective, it would seem worthwhile to consider options and opportunities prior to return.
Here's the first article I found when searching:
http://www.kiplinger.com/article/saving ... yment.html
Key points appear to include:
1) Savings Deposit Program - 10% guaranteed return
2) Higher Thrift Savings Plan Limits up to $50k / yr
3) Roth benefits
I'm not clear if these options go away immediately when deployment ends.
I imagine the soldier in question is busy with non-financial matters, but from am financial perspective, it would seem worthwhile to consider options and opportunities prior to return.
Re: My deployed soldier is coming home!
A big THANK YOU to him for his service!
I second the TSP idea. I would open both traditional and TSP accounts but put only a small amount in the traditional account. Having an open traditional TSP account allows him to roll over future 401ks from employers into the TSP. It's good to keep that option open. I believe the account minimum is $200. I don't know whether that refers to $200 in contributions or $200 total worth after gains/losses. If the latter, put that in the G fund where it can never dip below the contribution amount. Then put the other contributions in the Roth TSP because he'll likely be in a higher tax bracket when he retires.
Also, I recommend maxing the contribution to a Roth IRA. The current limit is $5500 a year. In case you aren't familiar with Roth IRAs, they offer unique advantages. When he retires, he will not have to pay any tax on the amount earned. So if he puts in $5500 now and it is worth $20,500 when he retires (making these numbers up), he doesn't pay any tax on that additional $15,000. Second, whatever he has contributed to the Roth he can take out at any time without penalty. If he puts $5500 in now and needs that $5500 in a few months due to an unforeseen event, he can take that out without penalty.
The downside of a Roth IRA is that he has to pay taxes on the money now, unlike a traditional IRA. But since he expects to be in a higher tax bracket later, it's worth it.
He has until April 15 to contribute to a Roth IRA that counts toward the 2014 tax year.
I second the TSP idea. I would open both traditional and TSP accounts but put only a small amount in the traditional account. Having an open traditional TSP account allows him to roll over future 401ks from employers into the TSP. It's good to keep that option open. I believe the account minimum is $200. I don't know whether that refers to $200 in contributions or $200 total worth after gains/losses. If the latter, put that in the G fund where it can never dip below the contribution amount. Then put the other contributions in the Roth TSP because he'll likely be in a higher tax bracket when he retires.
Also, I recommend maxing the contribution to a Roth IRA. The current limit is $5500 a year. In case you aren't familiar with Roth IRAs, they offer unique advantages. When he retires, he will not have to pay any tax on the amount earned. So if he puts in $5500 now and it is worth $20,500 when he retires (making these numbers up), he doesn't pay any tax on that additional $15,000. Second, whatever he has contributed to the Roth he can take out at any time without penalty. If he puts $5500 in now and needs that $5500 in a few months due to an unforeseen event, he can take that out without penalty.
The downside of a Roth IRA is that he has to pay taxes on the money now, unlike a traditional IRA. But since he expects to be in a higher tax bracket later, it's worth it.
He has until April 15 to contribute to a Roth IRA that counts toward the 2014 tax year.
Re: My deployed soldier is coming home!
As others have said I thank your son for his service.
+4
+4
Re: My deployed soldier is coming home!
Tell your son I wish i could buy him a
Re: My deployed soldier is coming home!
+1 to the thanks and using TSP, plus also:
Make sure that he gets enrolled with the VA now, even if he chooses to get healthcare elsewhere for now. He'll have 5 years of eligibility as a combat vet, I think, but it's still wise to get in now while he can. A whole lot of veterans were awfully grateful that they did this when they lost insurance/ jobs/ etc in 2008-2009.
I'm so glad that he's home safe. I know that's wonderful for you and all his other friends and family!
--but oh yeah, get that TSP thing started. The impact of time is so huge, and so difficult to understand when young.
Make sure that he gets enrolled with the VA now, even if he chooses to get healthcare elsewhere for now. He'll have 5 years of eligibility as a combat vet, I think, but it's still wise to get in now while he can. A whole lot of veterans were awfully grateful that they did this when they lost insurance/ jobs/ etc in 2008-2009.
I'm so glad that he's home safe. I know that's wonderful for you and all his other friends and family!
--but oh yeah, get that TSP thing started. The impact of time is so huge, and so difficult to understand when young.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri
Re: My deployed soldier is coming home!
After you hug him...
Gift him a copy of William Bernstein's If You Can: How Millennials Can Get Rich Slowly.
It's a short book, quick read, full of wisdom.
Download it for free from the author's website:
http://efficientfrontier.com/ef/0adhoc/2books.htm
Or buy the book from Amazon $5.99:
http://www.amazon.com/If-You-Can-Millen ... tein+books
Gift him a copy of William Bernstein's If You Can: How Millennials Can Get Rich Slowly.
It's a short book, quick read, full of wisdom.
Download it for free from the author's website:
http://efficientfrontier.com/ef/0adhoc/2books.htm
Or buy the book from Amazon $5.99:
http://www.amazon.com/If-You-Can-Millen ... tein+books
Re: My deployed soldier is coming home!
Also, thanks to your son and welcome! Is your son remaining in the military when he comes home?
In any case, please have him join this forum. He'll get plenty of help. In fact, we have an entire wiki page for helping US military: Military finances
As others stated, keep that 50k in a "safe" place like a bank or CD until he gets a plan in place. Start here: Getting started
Slow down, take your time, and pay attention to this article: Financial planning
In any case, please have him join this forum. He'll get plenty of help. In fact, we have an entire wiki page for helping US military: Military finances
As others stated, keep that 50k in a "safe" place like a bank or CD until he gets a plan in place. Start here: Getting started
Slow down, take your time, and pay attention to this article: Financial planning
- Uncle Pennybags
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Re: My deployed soldier is coming home!
That's fantastic; the military has changed from when I was in. After 13 month of overseas duty I brought back $6,654.49 in today's dollars. That was hazard duty pay too.Randommly wrote:My 20 year old son is coming home in 28 days after being deployed for 9 months somewhere fighting ISIS. He would like to invest around $50k when he comes home.
Re: My deployed soldier is coming home!
Thank you all for your responses. We don't get to talk to him very often since he's been deployed and I am not sure if he is investing in what is available to him in the military. We are not a military family - he's the first, thank you for the sites listed, I will definitely read them all. On our next call I will talk with him to see if he is investing in the TSP. This is his second deployment and he has sustained what I would call serious injuries this time. All our calls are monitored and we aren't able to talk freely. He is unable to do much research as he has very limited internet use. He is sort of counting on me and his Dad to come up with option plans for his nest egg.
Re: My deployed soldier is coming home!
Tell your son Thank You and your family as well!!!
The Bogleheads are a great group of people that will guide him and teach him!! Make sure he gets to talk to Taylor Larimore. A better teacher would be hard to find!!
The Bogleheads are a great group of people that will guide him and teach him!! Make sure he gets to talk to Taylor Larimore. A better teacher would be hard to find!!
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!
Re: My deployed soldier is coming home!
Thank you to your son for his service and sacrifice.
All the previous posts gave excellent advice for your son. Here is more advice based on my personal experience as a recent OEF vet (Afghanistan War). I heard many junior officers and junior enlisted ask for investment advice as we were on our way home from our deployment. Many of them actually have debts/high interest loans back home. Before investing in the TSP funds, they should try to pay off any loans. If they insist on investing, they should put the minimum allowed in the TSP and use the remainder to pay off the debts. Once the debts are paid off, put the rest in the TSP funds, based on an allocation he is comfortable with. Also, most CONUS bases (in the continental US) have a system for returning soldiers, to enroll them in the VA Health system if they are leaving active duty. Please remind your son to register in the VA Health system before he leaves his base. Once he leaves, the process is even more complex and difficult. If he needs to find a job back home, war vets are also given preference for employment within the VA system. He can look into that, too.
Good luck to your son, and I hope his recovery goes well and quickly.
All the previous posts gave excellent advice for your son. Here is more advice based on my personal experience as a recent OEF vet (Afghanistan War). I heard many junior officers and junior enlisted ask for investment advice as we were on our way home from our deployment. Many of them actually have debts/high interest loans back home. Before investing in the TSP funds, they should try to pay off any loans. If they insist on investing, they should put the minimum allowed in the TSP and use the remainder to pay off the debts. Once the debts are paid off, put the rest in the TSP funds, based on an allocation he is comfortable with. Also, most CONUS bases (in the continental US) have a system for returning soldiers, to enroll them in the VA Health system if they are leaving active duty. Please remind your son to register in the VA Health system before he leaves his base. Once he leaves, the process is even more complex and difficult. If he needs to find a job back home, war vets are also given preference for employment within the VA system. He can look into that, too.
Good luck to your son, and I hope his recovery goes well and quickly.
Maximum efficiency, minimum effort
Re: My deployed soldier is coming home!
Have you compared your pay to what the pay is now in real dollars?Uncle Pennybags wrote:That's fantastic; the military has changed from when I was in. After 13 month of overseas duty I brought back $6,654.49 in today's dollars. That was hazard duty pay too.Randommly wrote:My 20 year old son is coming home in 28 days after being deployed for 9 months somewhere fighting ISIS. He would like to invest around $50k when he comes home.
- Uncle Pennybags
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Re: My deployed soldier is coming home!
That is inflation adjusted, it was $1,100 in 1970; they didn't have to pay conscripts minimum wage. I look up today's pay, it is $225 a month extra in "combat pay" for all ranks. The OP's son must be a O-5, major, to make $50K in 9 months.tibbitts wrote:Have you compared your pay to what the pay is now in real dollars?Uncle Pennybags wrote:That's fantastic; the military has changed from when I was in. After 13 month of overseas duty I brought back $6,654.49 in today's dollars. That was hazard duty pay too.Randommly wrote:My 20 year old son is coming home in 28 days after being deployed for 9 months somewhere fighting ISIS. He would like to invest around $50k when he comes home.
He must have possessed some very special skills to be a major at 20 years old with less than three years service. There must be more to this than the OP knows about; maybe he is a very good poker player. It would be very helpful if the son posted.
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Re: My deployed soldier is coming home!
Vanguard LifeStrategy Growth fund or Target Retirement 20XX fund.
Re: My deployed soldier is coming home!
Thank him for his service. Welcome home.retiredjg wrote:As I understand it, he could have been sending money tax free to the TSP (military 401k like plan) while deployed. That way, the money goes in tax free and comes out tax free. It is hard to imagine he is not aware of that.
As a retired fed, a few points on the TSP:
1. TSP contributions are from each paycheck, not after the fact. Set it up with payroll for future contributions.
2. TSP contributions are not taxed, withdrawals are taxed, just like a traditional IRA.
3. He probably can't put that $50K into the TSP now since it's not a payroll contribution, but ...
4. Consider making a traditional IRA contribution for 2014 and 2015, because ...
5. Traditional IRA holdings can be transferred INTO the TSP - TSP form 60.
Steve
Re: My deployed soldier is coming home!
After talking with my son, he has contributed the maximum amount into the TSP since enlisting. He has no expenses or debts to pay when he arrives home - not even his credit card. We will look into the ROTH IRA when he gets home. While deployed he re-enlisted for another 8 years and plans to make this his career choice. He is attending college in September (my understanding is that he'll go to a civilian status for 4 years) to get a degree, then he will go back as an Officer. Eligible service members can get up to 100% Tuition Assistance for college, I will know more on this when he gets home.
Honestly I felt a little "attacked" by a few of the above postings about the money he plans to invest. If you reread my first post I stated when he gets back from deployment he would like to invest $50k. Also the Army offers many bonuses and incentives to their soldiers depending on their years of enlistment, days of deployment, skills and achievements, etc. http://militarypay.defense.gov/PAY/SI/SIINDEX.ASPX Plus he had a bit of money in his bank account prior to deployment, I know what he has as I have access to his account, and he has decided he would like to start investing for his future when he gets home.
He says he wants something that will grow with time and that he doesn't have to check on a regular basis or worry about too much. LOL
I've read and printed out (for him) a bunch of info some of you listed to read. THANK YOU! Very helpful and appreciated.
He also told me to tell you all "Thank You" and "Your Welcome" - he appreciates very much your help with his investment choices.
Honestly I felt a little "attacked" by a few of the above postings about the money he plans to invest. If you reread my first post I stated when he gets back from deployment he would like to invest $50k. Also the Army offers many bonuses and incentives to their soldiers depending on their years of enlistment, days of deployment, skills and achievements, etc. http://militarypay.defense.gov/PAY/SI/SIINDEX.ASPX Plus he had a bit of money in his bank account prior to deployment, I know what he has as I have access to his account, and he has decided he would like to start investing for his future when he gets home.
He says he wants something that will grow with time and that he doesn't have to check on a regular basis or worry about too much. LOL
I've read and printed out (for him) a bunch of info some of you listed to read. THANK YOU! Very helpful and appreciated.
He also told me to tell you all "Thank You" and "Your Welcome" - he appreciates very much your help with his investment choices.