New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

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hammer10k
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Joined: Mon Oct 17, 2016 4:48 pm

New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by hammer10k »

Hi all,

I opened accounts with AssetMark and maxed my Roth IRA for the year and put $3k into an investment account. Both accounts are designed for "an investor who seeks significant capital appreciation and is willing to accept a correspondingly greater risk of loss and volatility of returns." This is 5/6 on their risk scale.

I have ~$20k coming in as an inheritance and about ~$3k a month from my salary to put into investments. Real estate would be too much for me to juggle right now with flight school.

Any thoughts on how I should approach investing? I'd like to have a more conservative account to diversify, maybe with Vanguard, as well as possibly changing my Roth IRA strategy to a more conservative approach. However, I'm new to all of it.

Any help is much appreciated!
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Taz
Posts: 458
Joined: Tue Jan 13, 2009 9:10 am
Location: Florida

Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by Taz »

General thoughts:
- Start putting something in the Thrift Savings Plan. If you don't see it you can't spend it.
- Avoid First Command. Period.
BTW, I really don't think you need a financial plan from someone like AssetMark who is going to sell you products. You can do it yourself. I went through the advisor route as a jg/LT. Read the suggested books from the wiki.
- Never buy a mutual fund with a load.
- Read the suggested books from the wiki.
- Pay raises come quickly the first 4 years. Don't spend it all. But do spend some - as Ferris Bueller said, "life moves fast. If you don't stop and look around you could miss it."

Taz (retired NFO)
The destination matters.
Bastiat
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Joined: Thu May 26, 2016 11:07 am

Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by Bastiat »

Continue to Max IRA.
Try to max your TSP.
Maybe throw some extra money into taxable.
You don't need an advisor.
Don't buy a house until you get your wings.

But most importantly:
Stop posting on financial forums and get to the beach/FloraBama.
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PMM32683
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Location: Northern VA

Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by PMM32683 »

"I opened accounts with AssetMark and maxed my Roth IRA for the year and put $3k into an investment account. Both accounts are designed for "an investor who seeks significant capital appreciation and is willing to accept a correspondingly greater risk of loss and volatility of returns." This is 5/6 on their risk scale...Any thoughts on how I should approach investing? I'd like to have a more conservative account to diversify, maybe with Vanguard, as well as possibly changing my Roth IRA strategy to a more conservative approach. However, I'm new to all of it."

What are the expense ratios associated with your accounts? What exposure are you receiving in your accounts (Large Cap, Emerging Markets, Utilities, etc)? What is your target stock/bond asset allocation? I recommend seeking something with broad diversification and low expense ratios, such as Vanguard's Total Stock Market Index which provides exposure to the full US equities market with only 0.05% expense ratios.

As far as changing to a conservative Roth IRA strategy I would recommend you take a more aggressive position, as you are young, and have ~40 years until you can even touch it. Time and compounding interest, along with an appropriate level of risk, will help your money grow. Most of the Target Retirement funds also take this approach, as it is widely recommended by nearly all of the financial planners. Think about Vanguard's Target Retirement 2060 Fund if you want someone else to do the math for a low fee, or simply invest 100% in stocks with a 60/40 US/Int'l allocation for the next couple of decades.
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kauailover
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Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by kauailover »

Never pay a commission; use no load fund companies; you will be a very rich man in no time.
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LadyGeek
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Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by LadyGeek »

Welcome!

The wiki provides extra help for US military. See: Military finances - Pass the link around to your buddies.

Why don't you post what you have in this thread using the Asking Portfolio Questions format? It will make you think about the "big picture" while giving us the info we need to point you in the right direction.

Take your time and do some reading. Start here: Getting started

If you have any questions, ask them here.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
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badbreath
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Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by badbreath »

this is another guy who blogs about military investment but he is a Boglehead

http://militaryfinrep.blogspot.com/
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx
alefox06
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Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by alefox06 »

-Make maxing your Roth every year your top priority.
-Keep your expenses low.
-You can live like a cheap flight school student for quite some time.
-As you get promotions, save the majority of your money. Spend some of it to have fun, but put at least 75% of each raise into savings.
-Take full advantage of the matching TSP.
-You don't need an advisor, you can do it yourself for much cheaper.
-Don't worry about real estate now, you can look at buying a house at your next duty station, then renting it after you leave. Worry about that towards the end of flight school so you can plan to save for a down payment (keep some in taxable).

Last, but not least, enjoy the fact that you are getting paid $50k to learn to fly.
Fishing50
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Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by Fishing50 »

I’m a military officer preparing to retire at 50yrs old with my pension and over $600K investments. I made some mistakes along the way but didn’t do anything special.

I was 100% invested in stocks from 1995-2015. The tech bubble crash in 2000 taught me to buy diversified low cost mutual funds instead of the hot stocks discussed in the wardroom. TSP became available to uniformed service in 2002, and I DCA into a diversified total stock market portfolio owning C, S, I funds. We also contribute maximum to ROTH IRA accounts for my wife and I (invested in Emerging Markets).

Never take a loan from TSP - Compound interest is amazing! I reduced contributions to purchase a house in 2007, and I found a way to increase contributions as the market collapsed. On the rebound, I’m extremely thankful my TSP account wasn’t invested in the house.

Avoid tax exempt contributions in the combat zone. I contributed over $20K during 02x tours because saving was easier during deployment, but that money is untouchable until TSP withdrawals begin. Savings Deposit Program is better alternative. I used a lump sum to fund SDP. When SDP eligibility expires, invest tax exempt money in a taxable account using low cost mutual funds. In 2003 I stashed new car money in an ETF that has appreciated 136%. I drove a 2000 Tahoe for 13 years, the last PCS move paid more than the car was worth.

I split TSP contributions between tax deferred and ROTH which I feel is good balance saving on current year taxes and taking some ROTH advantage into the future. I’m in the 25% tax bracket now, and I predict my pension will keep me in the 25% bracket when I retire. ROTH an excellent option for you in a lower tax bracket.

Keep Charging! :sharebeer
1yr from military pension. 80 equites / 20 bonds for life, ZERO emergency fund, 100% taxable in equities (dividends in cash), 33% taxable, 30% Roth, 37% tax deferred. | Gone Fishing At 52yrs old!
retiredjg
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Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by retiredjg »

hammer10k wrote:Any thoughts on how I should approach investing? I'd like to have a more conservative account to diversify, maybe with Vanguard, as well as possibly changing my Roth IRA strategy to a more conservative approach. However, I'm new to all of it.

Any help is much appreciated!
Consider posting your information in the format used for portfolio questions. It is some work, but since you are just starting, it should be pretty easy. This information will help people help you. See the link at the bottom of this message for how to do that.

It is unclear if you are invested more aggressively than you should be or if you want some of your money set aside for a different goal.
friar1610
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Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by friar1610 »

I can't echo the previous comment about avoiding First Command strongly enough!

Enjoy the FloraBama and that sugar-white sand. (Spent 2 years at Corry a LONG time ago.)
Friar1610
SurferLife
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Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by SurferLife »

Welcome to the family.
I would recommend trying to max your Roth TSP and Roth IRA. That's $23,000 right there, so it'll be a good chunk of your income, but you're living way under your means which is great! If you have money left over, then a taxable account would be next, and recommendations can be found here on what low cost Vanguard Funds to use.

I'd also recommend staying away from First Command and not paying anyone to manage your investments. With the resources available here, you can do this on your own and save a lot of money in the long run.

I recommend to most officers to not buy a house as I've just seen too many people become reluctant landlords when they PCS and can't sell their house. Instead, you may consider building up that taxable account and buying a house on the 100% down plan when you retire.

As for the new blended retirement plan, you will be given the opportunity to choose between that and high-3. If you plan on doing 20 years, high-3 is the way to go.

Don't forget to have an emergency fund.
DTSC
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Location: Illinois

Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by DTSC »

Thank you for your service.

Here's a website by a retired military officer who writes about financial independence and early retirement.

http://the-military-guide.com/
zag00
Posts: 286
Joined: Wed Oct 29, 2014 3:15 pm

Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by zag00 »

Thank you for your service.
Received some great advice above so no need to echo.
My brother is currently in Pensacola as well, you may/may not know him, would be easy to figure out utilizing my username.
golfallday
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Location: College Point, NY

Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by golfallday »

Hearty thanks for your service, sir. Definitely max that TSP!
Topic Author
hammer10k
Posts: 20
Joined: Mon Oct 17, 2016 4:48 pm

Re: New military officer. $50,000 yearly salary with no debt, no dependents, and $500 a month overhead. Thoughts?

Post by hammer10k »

Ya'll are all rockstars. Thank you for the advice! I've been going through each response and appreciate them all. More to come.
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