A youngster working on portfolio, help?

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AFinvest
Posts: 7
Joined: Fri Oct 04, 2013 3:58 pm
Location: Texas

A youngster working on portfolio, help?

Post by AFinvest » Mon Oct 07, 2013 5:10 pm

Hey guys,

I'm in need of some assistance, and hoping you guys could give me some
input!
Here's a little background on me;

I'm 21, and in the USAF DEP (Delayed Entry Program). Right now, before I
leave for Basic Training, my current goal is to get as much of my ducks in
a row as possible before leaving. Trying to make my IPS was truly
difficult, but it'll shape up after further research and insightful
thinking.

Current Short-Term Goals-
Start and Max out a Roth IRA for the year 2013, and again for 2014.
Totalling 11k + tax.
Put the rest of my savings into a HYS at GE Capital Bank (.90% APY)
Mid-Term Goals-
Start putting savings into TSP (or Roth TSP) - AA is the same for Roth and
TSP (May be more :moneybag in bonds)
If/When deployed putting 10k into the Savings Deposit Program.
Long-Term Goals-
Retirement savings, diverse portfolio, passive income, follow my IPS and
stay simple!

Emergency funds: 3 months
Debt: None
Tax Filing Status: Single
Tax Rate: 10% Federal, 0% State
State of Residence: TX
Age: 21
Desired Asset allocation: 79% stocks / 21% bonds
Desired International allocation: 15% of stocks

Currently have a 5 figure savings account.
Once I'm officially enlisted, as an E3, I'll have much more money to invest in.
Each paycheck = 25% tax, 20% saving, 15% fun, 40% foundation
(Subject to change once enlisted and have done budget planning).


Questions:
1. How does this look to you guys as of right now?
2. Is opening a Roth IRA account with VanGuard my best choice because of
the low expense ratios/fees?
Almost sure I answered my own question there, but just looking for
opinions.

I still have an incredible amount of research to do, the Wiki page is doing
wonders; and I'm hoping to buy some books soon.

Hopefully this is in an acceptable format. If you guys/gals need any extra
information or re-formatting I'll be happy to adjust.
Thank you in advance for your time and effort!

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nirvines88
Posts: 391
Joined: Thu Dec 29, 2011 5:38 pm

Re: A youngster working on portfolio, help?

Post by nirvines88 » Mon Oct 07, 2013 9:07 pm

AFinvest wrote:1. How does this look to you guys as of right now?
Looks like a good plan.
AFinvest wrote:2. Is opening a Roth IRA account with VanGuard my best choice because of the low expense ratios/fees
Most here, including myself, would say yes.
AFinvest wrote:I still have an incredible amount of research to do, the Wiki page is doing wonders; and I'm hoping to buy some books soon.
You will be back with more questions as you continue to read more! :wink:
"Beware of little expenses, a small leak will sink a great ship" - Poor Richard

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carorun
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Location: Chicago

Re: A youngster working on portfolio, help?

Post by carorun » Mon Oct 07, 2013 10:11 pm

Thank you for your service.

My brother did USAF DEP, and I remember how frustrating the wait could be. Do you know yet when you will leave for Lackland?

You are doing the right thing by getting your finances in order before basic training. I'm also incredibly impressed that you plan to essentially save 50% of your income (assuming you will be enlisted). Your tax rate will be minimal for the next 4-8 years- certainly not 25%, and I would be surprised if your marginal rate is even 15%. For that reason, I would put as much as possible in the Roth TSP. Unless you plan to use your Roth IRA as a backup emergency fund, I would redirect contributions to the TSP once you can access it. When you deploy, take advantage of the $10k savings account with fixed interest to sock away combat pay. Sorry I don't have more details, I know it's a military thing and someone will be along with more info.

If you can keep your savings rate up, and steer clear of the sharks that sell outside military bases, you'll be in great shape.

AFinvest
Posts: 7
Joined: Fri Oct 04, 2013 3:58 pm
Location: Texas

Re: A youngster working on portfolio, help?

Post by AFinvest » Wed Oct 09, 2013 10:02 am

nirvines88 wrote:
AFinvest wrote:1. How does this look to you guys as of right now?
Looks like a good plan.
AFinvest wrote:2. Is opening a Roth IRA account with VanGuard my best choice because of the low expense ratios/fees
Most here, including myself, would say yes.
AFinvest wrote:I still have an incredible amount of research to do, the Wiki page is doing wonders; and I'm hoping to buy some books soon.
You will be back with more questions as you continue to read more! :wink:
Thanks for you answers! You bet I will be, and I'm glad that there will be helpful members like yourself :sharebeer
vachica wrote:Thank you for your service.

My brother did USAF DEP, and I remember how frustrating the wait could be. Do you know yet when you will leave for Lackland?

You are doing the right thing by getting your finances in order before basic training. I'm also incredibly impressed that you plan to essentially save 50% of your income (assuming you will be enlisted). Your tax rate will be minimal for the next 4-8 years- certainly not 25%, and I would be surprised if your marginal rate is even 15%. For that reason, I would put as much as possible in the Roth TSP. Unless you plan to use your Roth IRA as a backup emergency fund, I would redirect contributions to the TSP once you can access it. When you deploy, take advantage of the $10k savings account with fixed interest to sock away combat pay. Sorry I don't have more details, I know it's a military thing and someone will be along with more info.

If you can keep your savings rate up, and steer clear of the sharks that sell outside military bases, you'll be in great shape.
Well, not to get into too many details but somehow my contract wasn't 'sent' when my recruiter told me (at now fault of my own)
It could have been because of the government shutdown, the day I was supposed to sign my contract. So I have no idea, and it's a bit frustrating.

Yes I'll be enlisted, and thank you! I'm glad to hear that about my tax rate. My grandma (prior AF service) told me you can only give a certain percentage each paycheck for the TSP. This may be old new, but if it isn't there would be no way to max it out I'm assuming.

Thanks for all the help so far! I really appreciate the feedback.

Luke Duke
Posts: 779
Joined: Tue Jun 18, 2013 11:44 am
Location: Texas

Re: A youngster working on portfolio, help?

Post by Luke Duke » Wed Oct 09, 2013 10:33 am

This should contain the TSP info that you need. If you have any questions, I'm sure that someone here can help.

https://www.tsp.gov/PDF/formspubs/tspbk08.pdf

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FNK
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Joined: Tue May 17, 2011 7:01 pm

Re: A youngster working on portfolio, help?

Post by FNK » Wed Oct 09, 2013 10:39 am

In both Vanguard's ROTH and TSP get the target retirement funds suitable for you. They may be more aggressive than your 79/21, but with a small early portfolio it's not a big deal. Let the funds handle the rebalancing while you focus on the service. Once you reach $50-100K, break them up.

AFinvest
Posts: 7
Joined: Fri Oct 04, 2013 3:58 pm
Location: Texas

Re: A youngster working on portfolio, help?

Post by AFinvest » Thu Oct 10, 2013 7:17 pm

Luke Duke wrote:This should contain the TSP info that you need. If you have any questions, I'm sure that someone here can help.

https://www.tsp.gov/PDF/formspubs/tspbk08.pdf
This link helped so much! Going to come in handy, thanks.
FNK wrote:In both Vanguard's ROTH and TSP get the target retirement funds suitable for you. They may be more aggressive than your 79/21, but with a small early portfolio it's not a big deal. Let the funds handle the rebalancing while you focus on the service. Once you reach $50-100K, break them up.
That's what I had been considering, a more aggressive approach at this stage. Of course, Service Before Self.

AFinvest
Posts: 7
Joined: Fri Oct 04, 2013 3:58 pm
Location: Texas

Re: A youngster working on portfolio, help?

Post by AFinvest » Fri Oct 11, 2013 10:14 pm

Hey guys, so I started up a Roth IRA with Vanguard; and I've already made my first mistake!! :oops:
I investe 80% bonds and 20% stocks basically.
I'm not sure how such an idiotic mistake will be made up for before the new year, when I'm able to contribute more.

Do you think I should exchange my bonds for the stocks, as I had originally planned?
I plan to never make this mistake again. I guess getting caught up in the excitement of investing, I forgot to pay attention to detail.
Hopefully there is good news for me, otherwise I'll take my licks and contribute next year.

pkcrafter
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Contact:

Re: A youngster working on portfolio, help?

Post by pkcrafter » Fri Oct 11, 2013 10:31 pm

AFinvest wrote:Hey guys, so I started up a Roth IRA with Vanguard; and I've already made my first mistake!! :oops:
I investe 80% bonds and 20% stocks basically.
I'm not sure how such an idiotic mistake will be made up for before the new year, when I'm able to contribute more.

Do you think I should exchange my bonds for the stocks, as I had originally planned?
I plan to never make this mistake again. I guess getting caught up in the excitement of investing, I forgot to pay attention to detail.
Hopefully there is good news for me, otherwise I'll take my licks and contribute next year.
Vanguard has some 60 day frequent trading policies that you need to be aware of, but I think you're OK since you will be selling bonds and buying stocks--not selling then buying the same fund within 60 days.

http://www.bogleheads.org/wiki/Frequent_trading_policy

Did you buy two funds or LS income?


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

AFinvest
Posts: 7
Joined: Fri Oct 04, 2013 3:58 pm
Location: Texas

Re: A youngster working on portfolio, help?

Post by AFinvest » Sat Oct 12, 2013 9:46 am

pkcrafter wrote:
http://www.bogleheads.org/wiki/Frequent_trading_policy

Did you buy two funds or LS income?


Paul
Thanks, Paul. I think I may qualify to do that.
I could sell all my bonds, and buy back into STAR and International stocks.
Going to make a phone call to figure this out.

AFinvest
Posts: 7
Joined: Fri Oct 04, 2013 3:58 pm
Location: Texas

Re: A youngster working on portfolio, help?

Post by AFinvest » Wed Oct 16, 2013 5:30 pm

Update-
The exchange was very easy, no fees whatsoever.
Also, on a side-note, my contract came in!
Not sure why, but I still don't have a ship off date for BMT.

Again, thanks for all the help guys!

AFinvest
Posts: 7
Joined: Fri Oct 04, 2013 3:58 pm
Location: Texas

Re: A youngster working on portfolio, help?

Post by AFinvest » Fri Sep 26, 2014 12:48 pm

Update- 26SEP2014

Hey everyone! Glad to say I'm back and ready to get learning again. Sorry to say that my financial planning hasn't go as I planned, and have a couple questions I'm hoping someone can answer.

So, I maxed out my Roth IRA last year but not for this year. This is my first plan of action, maybe.

Here's what I'm wanting to invest in the near future:

- 5.5k in Roth IRA for 2014.
- Another 5.5k in January for 2015.
- Start my Roth TSP, putting 10% of my pay into it every month.

Now, this is where I get stuck.

1. Should I invest my Roth IRA 2014/15 money into solely the Roth TSP?
I'd like to pull out money for a house eventually, which is why I was thinking about keeping the Roth IRA.

2. Where should I put the remaining dollars away?
After putting 11k away into the Roth IRA, I'll have 24k to invest freely.
I'm going overseas for the rest of my enlistment, but will need money for a car when I get out.
So I'd like to start a savings plan with at least 10k, a high yield savings account or laddering CDs.

I'd like to start a checking/savings (fun money) account with USAA. Possibly a NavyFed account for CD's, and starting a local account in Korea with very little money, just trying to be safer then carrying the physical Won around.

Sorry for the lack of knowledge, again.

I'd like to put this money away as quickly as possible since I'll be leaving again soon and would like to start up savings ASAP.

I appreciate any help! I'll be doing extra reading for the little time I'm home.

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