Investing might seem intimidating at first, but as a military spouse, you’re already skilled at navigating complex situations. Investing is the number one way to grow your wealth over time. It can also significantly enhance your financial security. This might mean funding your children’s education, buying a home, or building a robust retirement fund. Unlike savings accounts, which often offer minimal interest rates that barely keep up with inflation, investments have the potential for much higher returns, allowing your money to grow in real terms. Here’s how to get started.
Building a Strong Foundation
Before jumping into investing, it’s important to establish a solid financial base. Start with an emergency fund that covers three to six months of living expenses. This fund will be your safety net, so you can rest easy when you start investing. You’ll also want to clear any high-interest debts, like credit cards or personal loans, before you funnel money elsewhere. That’s because the interest on these debts can outweigh the benefits you might gain from investment returns.
No matter what you decide, it’s a good idea to leverage benefits like the Thrift Savings Plan (TSP), which offers low-cost, tax-advantaged retirement savings options. The Savings Deposit Program (SDP) also provides a guaranteed 10% annual return on deposits up to $10,000 for those deployed in eligible areas.
Setting Clear Financial Goals
Once you’ve cleared the deck, it’s time to decide what you’re working toward. Is it a new house? That dream vacation to an island? Maybe your spouse just hit the halfway mark on their career, and it’s time to start actively planning retirement. No matter what your goal is, your timeline is going to directly determine how you invest.
For short-term investments that you plan to access within one to five years, consider high-yield savings accounts, Certificates of Deposit (CDs), or bonds. These options offer more stability but with lower returns.
If you’re planning further out, you might be able to take risks with investments in stocks, real estate, or diversified portfolios. Over time, these options tend to offer higher returns, albeit with greater ups and downs.
Understanding Risk Tolerance
Once you know how long you have to invest, you’ll need to get clear on your risk tolerance. Risk tolerance is your willingness and ability to take on risk. If market fluctuations make you anxious, you might prefer a more conservative portfolio with less risk. On the other hand, if you’re comfortable with some unpredictability, you can consider a more aggressive approach. Remember, military life often involves uncertainties like deployments or relocations, which can impact your financial stability and investment strategies.
Accessible Investment Platforms
As a milspouse, chances are you’re not going to be able to pop on a call with a financial advisor every few weeks. You probably don’t have the time to manually monitor investments, either. So, you’ll want to look for accessible and flexible investment platforms tailored to hands-off investors.
Platforms like Betterment, Wealthfront, and Vanguard Digital Advisor use advanced algorithms to create and manage diversified portfolios based on your risk tolerance and financial goals. These are great for hands-off investors who prefer automated management with lower fees.
On the other hand, TD Ameritrade, E*TRADE, and Charles Schwab offer a more hands-on approach, providing a wide range of investment options, including stocks, bonds, ETFs, and mutual funds.
If you’re not ready to go all in but you want to feel like you’re doing something, check out Acorns and Stash. These micro-investing platforms allow you to gradually build an investment portfolio with minimal effort.
When in Doubt, Resource Out
For personalized guidance, consider consulting with a financial advisor experienced in working with military families. They can provide insights tailored to your unique situation, including frequent relocations and military-specific financial programs. This personalized guidance can offer the support and reassurance you need to make informed investment decisions. Remember, you’re not alone in this journey. There are resources like Military OneSource that offer free financial counseling tailored to military families. Or, you might consider exploring the Military Spouse Financial Literacy Network. It provides workshops and materials to enhance investment knowledge and confidence.
Resources like Military OneSource offer free financial counseling tailored to military families. Or, you might consider exploring the Military Spouse Financial Literacy Network. It provides workshops and materials to enhance investment knowledge and confidence.
Investing is a powerful tool for building wealth and securing your family’s future. By setting clear financial goals, understanding your risk tolerance, and leveraging resources like military benefits and investment platforms, you can confidently navigate the unique financial challenges of military life.