5 important investments that every veteran should make - We Are The Mighty
MIGHTY MONEY

5 important investments that every veteran should make

Returning to civilian life after active duty can be confusing and somewhat daunting. Whether you have been in the military for many years or if you have returned home after a grueling tour, adjusting to your previous life is definitely not an easy task. While there is a myriad of questions you need to answer and many issues you need to tackle during this adjustment period, one of the most pressing questions is how to achieve financial freedom for your family.

5 Investment Opportunities for Veterans

Achieving financial stability can seem like a huge task for a veteran, but you can achieve it by creating passive income and even returning to the workforce. Most importantly, to achieve financial stability and freedom down the road, you need to make the right investments in your professional and personal realms. 

These investments range from setting up a retirement plan to actively investing in real estate, but this can also include upskilling and getting certified to take on a completely new career path. Let’s put the best options into perspective and look at some important life investments every veteran should make. 

Investing in health and life insurance

First and foremost, you need to set up your health insurance, which is especially important for veterans requiring long-term medical treatment, professional counseling, and more. Unless you have been in the service for 20 years and have health insurance through Tricare, you will have to look into health coverage outside of the military. Keep in mind–if you have a medical condition that is a direct result of your time on active duty, you may be eligible for Veteran Affairs health care coverage.

If you’re not eligible for either of these, then private health insurance is the way to go. You can find a plan that works for you through the Affordable Care Act or a new employer. Take your time to learn the key terms like deductibles, copays, coinsurance, and out-of-pocket maximums and how different insurers use them in their policies. You can extend your military healthcare coverage for up to 36 months post-service through the Continued Health Care Benefit Program to buy more time and sort out your health insurance. 

Consider Investing in Real Estate

The next big move you should make is to invest in real estate as a retired veteran. Due to rapid urbanization across the US and the world–real estate continues to be a thriving sector with many opportunities for long-term professional growth. Becoming a real estate investor allows you to sell properties for a quick influx of cash or rent real estate to business leaders and tenants to create a steady income. Both commercial and residential real estate investing are good options–and you should strive to invest in both over time.

Now, starting in real estate investing is best done with an experienced professional at your side – and by educating yourself first. There are many online platforms where you can learn the ropes quickly. The most -important step is to do your research to find up-and-coming real estate markets and good deals on properties and new developments. Over time, you should diversify your investments into commercial and residential properties–with a focus on sales-oriented and rent-oriented real estate. 

Get Certified and Invest in a New Career Path

Another great way to build financial stability over the long term while actively working is to change career paths through upskilling and online certification. For example, if you were a corpsman or a medic in any military branch– you might want to pursue a career in medicine and continue helping others in the civic healthcare system.

Now that the COVID-19 pandemic has created a need for highly-trained medical professionals– investing in advanced medical certification online is a great way for veterans to transition quickly into the healthcare industry and find stable employment. As a medic, you are already familiar with emergency response techniques and practices–now all you have to do is get the right certifications to work in a hospital or private practice. 

Because of the pandemic and many other socio-economic factors, the healthcare industry will be booming in the years to come, which is a great opportunity for you to thrive professionally. 

Set up a retirement plan

When you leave active duty, the first thing that can come to mind is how to ensure a healthy retirement. Naturally, you need money to do so, and you can do it by ensuring a steady cash flow from your real estate and other investments. However, you can also set up a retirement plan in other ways, mainly by saving up over the next few decades.

If you have 20 years of service, you are eligible for regular military retirement and a steady pension. If not, then you should start saving up now to meet your goals when you reach your retirement age. You can do this by opening up an individual retirement account (traditional or Roth), or you can contribute to a 401(k) plan. 

Invest in reducing your debt

Finally, make an investment plan to reduce your debt over the long term. It might not sound like an investment at first, but reducing and eliminating debt is one of the best ways to ensure a financially stable future. Make sure to set up a debt-repayment roadmap, and consider working with a financial advisor to minimize your losses and retain as much of your wealth as possible. 

Coming home from active duty can be tough–, and while you might want to deal with other immediate issues first, you should prioritize your finances and long-term stability. Consider making these investments now and over the next few years to build financial stability and freedom.

This article originally appeared on Active Duty Passive Income.

Articles

A Fort Bragg soldier won $2 million and definitely won’t blow it on these 9 things

On Jan. 13, Fort Bragg Army Reserve soldier Johnny Charlestin was celebrating his birthday when he learned that a $3 Powerball ticket he bought was a $2 million winner.


“I didn’t believe it, it was a feeling I’ll never forget,” Charlestin said in a press release from the N.C. Education Lottery. “It’s the best birthday present I’ve ever had.”

Charlestin then decided to leave the public spotlight, which is one of the things experts recommend lottery winners do. Hopefully this means he’s smart enough to invest the money wisely.

But since he’s a Fort Bragg soldier, there’s also a real chance he’ll spend his money this way:

1. Taxes will be taken out

5 important investments that every veteran should make
Photo: flickr/Ken Teegardin, Senior Living Center

30.75 percent, or $615,000 goes right back into government coffers. That leaves the enterprising soldier with $1,385,000.

2. Dip and jerky

5 important investments that every veteran should make
Photo: Wikimedia Commons/OAC

The winner’s first stop will be base shoppette where he’ll pick up the proper amount of dip for millionaire soldiers, as well as a little jerky to much on.

3. New car

5 important investments that every veteran should make
GIF: Giphy

This is an obvious stop, but for some reason, the new millionaire will still take out loans of 20 percent or more. Over the next five years, that b-tchin’ Corvette will cost him as much as a Lambo would’ve if he’d paid cash.

4. Electronics store

5 important investments that every veteran should make
Photo: Wikipedia/Chris McClave

Every new video game console, 10-20 games for each, a huge TV, and surround sound. A few movies will round out the purchase, about 500 of them. Most of the movies are about World War II paratroopers.

5. Adult “book” store

5 important investments that every veteran should make
Photo: flickr/leyla.a

This is for other movies. We will not explain further.

6. House

5 important investments that every veteran should make
Wikipedia/Andrew (Tawker)

Finally, the soldier will find a new place to live. Unfortunately, he’ll only realize after the fact that his surround system doesn’t properly fill the new entertainment room with sound. Since he threw away the receipts, he’ll buy a new one and give the old system to a groupie (he’ll have those now).

7. Energy drinks

5 important investments that every veteran should make

This will take up more money than any non-soldiers would expect.

8. All the booze

5 important investments that every veteran should make

There are roughly infinity liquor stores at the Fort Bragg perimeter, as well as a Class VI store on base. These will become empty.

9. Noise citations

5 important investments that every veteran should make
Photo: Wikipedia/Highway Patrol Images

Once the party starts, Fayettnam police officers will be visiting every 15 minutes or so and writing a ticket. By the end of the night, the lottery money will be almost played out.

By the second week, the former millionaire will be attending finance classes on base and applying for an Army Emergency Relief loan to make his payments for the Corvette.

MIGHTY MONEY

The Pentagon is expanding a program that helps vets heal with art and writing

5 important investments that every veteran should make
National Endowment for the Arts Chairperson Jane Chu announces its expansion of sites within the Creative Forces Military Healing Arts Network at the National Intrepid Center of Excellence in Bethesda, Md., Oct. 21, 2016. (DoD photo by Amaani Lyle)


Walter Reed National Medical Center announced this week a plan to expand a partnership between the National Endowment for the Arts (NEA) and the Defense Department that focuses on creative art therapy for service members, veterans, and family members.

The “Creative Forces: NEA Military Healing Arts Network” focuses on art therapy such as writing, painting, and singing to help service members address and deal with post-traumatic stress and traumatic brain injury.

It’s currently offered at Walter Reed in Maryland and Fort Belvoir, Virginia.

“Post-traumatic stress disorder and traumatic brain injury are notoriously complex conditions to treat,” the NEA chairman Jane Chu said, noting that day long workshops don’t dig deep enough into the issues surrounding PTS and TBI.

Understanding that, the National Intrepid Center of Excellence decided to add a therapeutic writing program to its already existing creative art therapy program. That program now incorporates visual arts and music therapy.

5 important investments that every veteran should make
Masks, decorated by service members, sit on display as part of the Creative Forces: NEA Military Healing Arts Network at the National Intrepid Center of Excellence in Bethesda, Md., Oct. 21, 2016. (National Endowment for the Arts courtesy photo)

The program, which received an additional $1.98 million funding in fiscal year 2016, has plans to expand to Marine Corps Bases Camp Pendleton and Camp Lejeune; Madigan Army Medical Center in Tacoma, Washington; Joint Base Elmendorf-Richardson in Anchorage, Alaska; and Fort Hood in Killeen, Texas.

The NEA and DoD have enough funding to open those and five other sites around the country in 2017, the Pentagon says.

Readiness, diversity, location, population density and leadership were all taken into consideration when determining where to open expansion clinics, Chu said. Leadership is “critical to the success of our work together,” Chu explained, adding that the expansion will also work with a network of community based nonprofit organizations.

The goal with the expansion, according to Chu, is to develop a web of resources and tools to help local organizations and communities as they work with the military community among them.

Chu reports that, through the program, veterans are better able to manage stress.

“We’re seeing such transformational results in our service members and our expansion plans have come as a result of them saying that they want this program to be closer to their communities as they make a transition back into civilian life,” Chu explained. “This is a way to help service members and veterans … understand the dignity that they already have and so much deserve.”

MIGHTY MONEY

Retirement is the beginning of life 2.0

This article originally appeared on Victory Capital.

Doug Nordman is admittedly hooked on surfing. It makes him feel as if he’s flying atop the water. This is an interesting contrast for a guy who spent much of his career beneath it. Nordman is a retired Navy submariner.

The tight confines of a submarine leave little room for personal privacy. The cramped environment also makes it imperative that sailors work together. This is something Nordman took very seriously.

The ocean is a complex and dangerous place. Onboard a submarine, you have very little time in an emergency. If there’s a flood or a fire breaks out, decisions have to be made in seconds.

The Navy showed Nordman that he was part of something bigger than himself. That was tremendously motivating, and today he still carries that sense of community.

After 10 years in the service, Nordman advanced to become the executive officer on a boat. But the promotion came with a surprise. He was listed as XO in excess. Nordman made the cut but wasn’t assigned a vessel. He had no job.

He had trained his entire career for that next assignment and suddenly the deck dropped out from underneath him. He worried about work and leaving the Navy. Would he be able to find a civilian job? Would he like it?

“It was the first time in my career that I actually had to think about what I was going to do next,” he says. He was accustomed to a steady paycheck and didn’t want to give that up.

What happened next, he now regards as a mistake. Nordman remained in the Navy 10 additional years. He stayed for his full pension.

In hindsight, he realizes how many choices were available to him then. He could have joined the National Guard. Joining the Navy Reserve would have given him more time to spend with his family. And he could have afforded doing this. The Nordmans were big savers.

But they still made many common investment mistakes. They paid high fees and expenses. They moved money around more than necessary. Nordman recalls that they, “spent more money chasing performance than we would have made if we had just stayed invested and let it grow.”

He acknowledges that every one or two percent they paid in fees, delayed their financial independence by 6 months to a year.

If only he just had a little more financial knowledge…if only the Navy had provided financial literacy training.

“If someone had come up to me and said, ‘put down your tools and go to a training session on how to invest in the TSP or how to save for retirement’, I would have had a much better quality of life along the way.”

But Nordman’s life didn’t turn out so bad. When he retired in 2002, he learned to surf. He’s been doing it for nearly 20 years now. His financial independence lets him surf every day.

And he pays his good fortune forward. The sense of community that motivated his naval career leads him to teach service members and military families about financial literacy so that they can make better choices. Nordman is an avid blogger and author of The Military Guide to Financial Independence and Retirement.

Nordman points out that the resources are there and that service members should talk to their command. They should understand what kind of investor they are.

He also says that, “retirement is just the beginning of life 2.0. You have new choices and new ways of designing your life, to enjoy the things you’re passionate about.”

For more information and useful financial tools visit Victory Capital.

Featured photo: Doug Nordman, surfing

This article originally appeared on Victory Capital.

MIGHTY MONEY

FEMA says counties near military bases eligible for disaster assistance

Widespread devastation from Hurricane Matthew has prompted the Federal Emergency Management Agency to designate residents from a total of 55 counties as eligible for individual disaster assistance. States like Florida; South Carolina; Georgia; and North Carolina were hit hard by the storm — both in coastal communities and further inland past Fort Bragg.


5 important investments that every veteran should make
Specialist Jerimyha Pectol, 689th Rapid Port Opening Element, stages humanitarian aid intended for victims of Hurricane Matthew at Port-Au-Prince, Haiti, October 17th.

As the damage is assessed, FEMA has added counties from all four states where individual residents may apply for disaster relief funding.

Hurricane Matthew made its first landfall by slamming into Haiti on Oct. 4, resulting in over 800 casualties in that island nation. Matthew tore over Cuba and the Bahamas, before impacting the southern Atlantic states. By the time Matthew made its way back out to sea, the death toll had reached nearly 1,400.

The United States Southern Command released a statement Oct. 18 that the command had deployed more than 2,000 personnel and 11 helicopters aboard the USS Iwo Jima to deliver over 223 metric tons of aid and supplies to Haiti. SOUTHCOM expects that the military involvement will recede once “more experienced experts arrive” on the ground in Haiti.

President Obama declared a state of emergency in the four states Oct. 7, opening up federal financial aid. Each of the states’ governors declared states of emergency, and the National Guard was activated to several locations.

According to Newsy, Moody’s Analytics reported that the financial damage from Hurricane Matthew could surpass the $70 billion price tag of Superstorm Sandy.

As a direct result of the damage and the expected cost, FEMA has been quick to update its systems to open up aid to individuals in the stricken areas. There are several ways to request disaster relief funding. Individuals may visit the FEMA website, or call FEMA directly at 800-621-3362.

FEMA also recommends that those affected by the storm call their insurance company to make claims, document the damage with photographs, and complete a proof of loss. Insurance companies can help individuals with this process.

Currently, the list of counties that FEMA has approved for individual disaster relief includes:

  • Flagler County, Putnam County, St. Johns County, and Volusia County in Florida
  • Bryan County; Bulloch County; Chatham County; Effingham County; Glynn County; McIntosh County; and Wayne County in Georgia
  • Beaufort County; Bertie County; Bladen County; Columbus County; Craven County; Cumberland County; Dare County; Duplin County; Edgecombe County; Gates County; Greene County; Harnett County, Hoke County; Hyde County; Johnston County; Jones County; Lenoir County; Martin County; Nash County; Pender County; Pitt County; Robeson County; Sampson County; Tyrrell County; Washington County; Wayne County and Wilson County in North Carolina
  • Allendale County; Bamberg County; Barnwell County; Beaufort County; Colleton County; Darlington County; Dillon County; Dorchester County; Florence County; Georgetown County; Hampton County; Jasper County; Lee County; Marion County; Orangeburg County; Sumter County and Williamsburg County in South Carolina
Articles

This is how much troops were paid in every major American war

Think it’s hard making it month to month in the barracks on just an E-1 pay? Well, the recruits who won America’s earlier wars had to make ends meet with much, much less to draw on. See how much troops made in each conflict, both in their own currency and adjusted for inflation:


Author’s note: The pay structure changed over time. From the Korean War to today, military pay has been relatively consistent across the services and the numbers listed in entries 8-11 reflect the financial realities of an E-1 enlisted servicemember. For earlier conflicts, pay was calculated using the salary of a first-year Army private or a junior infantryman.

1. Revolutionary War

5 important investments that every veteran should make
Painting: Battle of Trenton by Charles McBarron

Privates in 1776 earned $6 a month plus a bounty at the end of their service. That pay would equate to $157.58 today, a pretty cheap deal for the poor Continental Congress. Unfortunately for soldiers, Congress couldn’t always make ends meet and so troops often went without their meager pay.

2. War of 1812

5 important investments that every veteran should make
Andrew Jackson wins the Battle of New Orleans two weeks after the War of 1812 ended.

Pay started at $5 a month for privates but was raised to $8 at the end of 1812. This was in addition to bounties ranging from $31 and 160 acres of land to $124 and 320 acres of land.

That $8 translates to $136.28 in 2016. The bounties ranged from $528.10 to $2,112.40 for terms of five years to the duration of the war.

3. Mexican-American War

5 important investments that every veteran should make
Storming of Monterey in September 1846 during the Mexican-American War. Image date: ca. March 2, 1847.

Young infantrymen in their first year of service during the Mexican-American War pocketed $7 per month, according to this Army history. That’s $210.10 in 2016 dollars.

4. Civil War

5 important investments that every veteran should make
The Battle of Chickamauga raged from Sep. 19-20, 1863. Painting: Library of Congress

Union privates in 1863 brought home $13 a month which translates to $237.51 in modern dollars. Confederate privates had it a little worse at $11 a month. The Confederate situation got worse as the war went on since the Confederate States of America established their own currency and it saw rapid inflation as the war situation got worse and worse.

5. Spanish-American War

5 important investments that every veteran should make
An undated photo shows soldiers manning a battle signal corps station during the Spanish-American War. Photo: Naval History and Heritage Command

While Army private pay in the Spanish-American War was still $13 like it had been in the Civil War, a period of deflation had strengthened the purchasing power of that monthly salary. In 2016 dollars, it would be worth $356.26.

6. World War I

5 important investments that every veteran should make
Photo: National Archives and Records Administration

A private, private second class, or bugler in his first year of service in 1917 was entitled to $30 a month. In exchange for this salary, which would equate to $558.12 today, privates could expect to face the guns of the Germans and other Axis powers.

World War I was the first war where, in addition to their pay, soldiers could receive discounted life insurance as a benefit. The United States Government Life Insurance program was approved by Congress in 1917 and provided an alternative to commercial insurance which either did not pay out in deaths caused by war or charged extremely high premiums for the coverage.

7. World War II

5 important investments that every veteran should make
Photo: US Army

In 1944, privates serving in World War II made $50 a month, or $676.51 in 2016 dollars. It seems like toppling three Fascist dictators would pay better than that, but what do we know.

8. Korean War

5 important investments that every veteran should make
Dressed in parkas (Overcoat, parka type, with pile liner), Missouri infantrymen pose for a New Year greeting, 19th Infantry Regiment, Kumsong front, Korea, 14 December 1951.

The minimum payment for an E-1 in 1952 was $78 a month which would equate to $700.92 in 2016. Most soldiers actually deploying to Korea would have over four months in the Army and so would’ve received a pay bump to at least $83.20, about $747.64 today.

This was in addition to a foreign duty pay of $8 a month along with a small payment for rations when they weren’t provided.

9. Vietnam War

5 important investments that every veteran should make
A U.S. Army soldier smokes after an all-night ambush patrol in Vietnam. Photo: Sgt. 1st Class Peter P. Ruplenas

E-1 wages were not increased between 1952 and 1958, so Korean War and Vietnam War troops made the same amount of money at the lower ranks — except inflation over the years drove the real value of the wages down. New soldiers pocketing $78 would have a salary that equates to 642.71 now, while those with over four months of service who pocketed $83.20 were receiving the equivalent of $685.56 in today’s dollars.

10. Persian Gulf War

5 important investments that every veteran should make
Yeah, $1318.12 should cover patrolling through this. No problem. Photo: Public Domain

Grunts who went into Iraq to topple Saddam Hussein were paid the princely sum of $753.90 a month in basic pay, unless they somehow managed to make it to Iraq with less than four months of service. Then they received $697.20.

These amounts would translate in 2016 dollars to $1318.12 and $1,218.98 respectively.

11. War in Afghanistan and the Iraq War

5 important investments that every veteran should make
Photo: Spc. Victor Egorov

Troops bringing the American flag back to Iraq in 2003 or deploying to Afghanistan in the same time period received just a little more than their Persian Gulf War predecessors, with $1064.70 for soldiers with less than four months of service and $1,150.80 for the seasoned veterans with four months or more under their belts.

In 2016 dollars, those salaries equate to $1377.93 and $1,489.36, a modest increase from the Persian Gulf War.

MIGHTY MONEY

A new study shows your chances of achieving the ‘American Dream’

For decades, the American Dream has been something not just sought out by Americans, but imagined by countless people around the world. It represents the chance to seize opportunity and a better life by elevating oneself through the fruits of their own labor. Every generation of Americans has sought to live the life outlined in the Constitution, “to secure the Blessings of Liberty to ourselves and our Posterity.”

In less poetic terms, we want to make more money than the generations who came before us. This gives us a better life, along with upward social mobility. But a recent study from researchers at Harvard and Brown Universities, along with the U.S. Census Bureau, questioned if the neighborhood in which we were raised has any effect on our ability to achieve that dream.


The answer is that it does. And now you can see what your chances are for yourself.

More than that, if a military member is considering moving to a new area or is perhaps leaving the military and doesn’t know where to go, the Opportunity Atlas might be a great place to start looking.

Using decades of data collected by the Census Bureau, researchers measured the outcomes of children’s lives based on the neighborhoods in which they were raised. These neighborhoods have a substantial effect on the lives of children in very significant ways. Even growing up just a mile or two away from where you did, according to the data, could be enough to have changed your average annual earnings by thousands of dollars.

The data was then used to create a tool that brings together information from the Census Bureau with the data from yearly income taxes. The result is the the Opportunity Atlas, and it’s available to anyone who might be looking to give their children a better life than their own.

The tool does not reveal any individual information, as it’s confidential.

5 important investments that every veteran should make

The Opportunity Map for Charlotte, North Carolina.

“You see that for kids turning 30 today, who were born in the mid-1980s, only 50 percent of them go on to earn more than their parents did,” Harvard University economist Raj Chetty told NPR. “It’s a coin flip as to whether you are now going to achieve the American Dream.”

The Opportunity Atlas is an interactive map, available to all, that can be used to determine the prospects of raising their children in a different neighborhood. The graphic overlay can show both affluence and poverty, and where people have . more opportunity to achieve that American Dream.

The Opportunity Atlas asks the viewer to choose what Census area they want to look at, which can be determined by city, state, or zip code. Then it asks what information we want to see, be it parental earnings, household incomes, job density, and more. Finally, it asks to determine a demographic overlay, breaking the map down by opportunity by race and gender.

Before we make any judgement calls, this is not about showing which neighborhoods are just rich and which are poor. While many of the high-opportunity neighborhoods are also the most costly, there are what the study calls “bargains” to be found. A bargain is an area of high mobility that isn’t necessarily related to the cost of living or average salaries.

5 important investments that every veteran should make

An example map of the Cleveland metro area.

It’s not just a useful tool to see where we’ve been or where our deficiencies are. It’s a way to look at where we should be headed, where the best places to raise children are, and where the best places to start a new life might be.

Getting out of the military is a harrowing adventure for most separating troops, but it doesn’t have to be. Data analysis can give you an edge on locating the biggest job opportunities are, where people are working, and where that work pays off the most.

You can compare your current duty station with your home of record or your spouse’s home of record with the click of a mouse – and help your children earn the American Dream you served to help them achieve.

MIGHTY BRANDED

5 ways USAA is still the leading financial institution for veterans

There are a lot of choice for veterans to leverage their time in the military to get great financial services at a competitive cost. The fact that so many businesses and bank are geared towards veterans is a blessing but one institution stands out among the rest – and has for nearly a century.


The financial institution was founded in 1922 after a group of Army veterans took it upon themselves to secure their own need for auto insurance. In doing so, they provided for their fellow veterans. The USAA of today carries that tradition on, with 12.4 million members and offering auto insurance, along with insurance for homeowners and renters, retirement planning, and, of course, banking services. When other banks were teetering on the edge of failure during the financial crisis, USAA actually grew. This is an institution that is as solid as a dollar.


5 important investments that every veteran should make

Auto Insurance

USAA’s original purpose is still one of its best offerings – and one of the best offerings. Even in competition with the civilian world’s best insurers, going with USAA can save its membership at least 0 on their premiums, even for high risk drivers who may have a DUI or more on their records. JD Power even gave USAA a 5/5 rating on their customer service and satisfaction records.

They also offer a car buying service that can sometimes save their members money in buying any kind of vehicle.

5 important investments that every veteran should make

Credit Cards

Everyone knows too much credit debt is not a good thing, but having a card open with a low balance enlarges your purchasing power and is actually good for your credit report. Still, it’s important to be responsible with your credit. That being said, that kind of responsibility includes deciding which card is right for you. USAA offers a few credit cards designed to fit the lives of military members, veterans, and their families. The USAA Rewards American Express Card and Reward Visa offers the best cashback bonuses a military member can find. USAA’s credit cards also offer some of the lowest interest rates and APRs found anywhere.

5 important investments that every veteran should make

Easy banking services

Any bank or financial institution who says they offer the best interest rates on savings accounts may have a bridge to sell you. Most savings accounts can offer two percent at the most. While USAA doesn’t offer quite that much, its banking services are stellar. Since they have few physical locations or ATMs, the bank offers reimbursements on ATM fees and no monthly service fees. On top of that, there’s no minimum balance and their rates are still competitive. They also offer free funds transfers between accounts.

5 important investments that every veteran should make

Retirement services

If you’re planning for retirement and want a low-risk security, you could hardly do better than some of USAA’s mutual fund offerings. USAA manages its own mutual funds and, in the face of the 2008 financial crisis, the USAA Income Fund (USAIX) posted a 19 percent return while much of the rest of the market struggled to break even or even minimize their expected losses. The reason? While USAIX invests heavily in corporate debt, the fund’s mantra is still about minimizing risk.

5 important investments that every veteran should make

TV doctor pose!

Other services and support

There are a couple of life insurance options, including one for military members only if SGLI isn’t enough. On top of that, they can get great rates for health, dental, and vision insurance as well as umbrella insurance for protection against things not covered by other kinds of insurance, like legal judgements. For per month you can be protected from lawsuits up to id=”listicle-2640236181″ million. But this veteran-oriented financial institution does so much more

USAA sponsors amazing veteran-oriented events and organizations – like the Military Influencer Conference, a three-day conference of service members, veterans, and spouses who work to elevate the military veteran community. The 2019 Military Influencer Conference is sponsored by USAA and brings together the brightest stars in the military-veteran entrepreneurial community to learn and share their business-building knowledge.

MIGHTY CULTURE

What to do with your TSP after the military

Leaving the military means making a lot of decisions — big decisions — often in a short period of time. One important decision, thankfully, doesn’t have a time limit: What should you do with the balance in your Thrift Savings Plan account?

Several myths and rumors surround the answer to that question, with plenty of salesmen wanting you to believe that you should move your money out of the TSP. Five clear options exist for service members and their TSP account assets after transitioning from the military. Even though there’s no single answer for everyone, three choices are more optimal for most people, and two choices are less right for most people.


The usually-better options include:

  1. Leave the money in your TSP account.
  2. Roll your TSP account balance into an Individual Retirement Arrangement.
  3. Roll your TSP account balance into your new employer’s 401(k) plan.

The rarely-better options include:

  1. Withdraw your TSP account balance in a lump sum.
  2. Transfer your TSP account balance to a qualified annuity.

Leave the balance in your TSP account

Once you have a TSP account, you can leave your money in there until you have to take required minimum distributions. There is no requirement to move it anywhere, at any time. In fact, most military-savvy financial planners recommend that you leave your retirement funds in TSP.

“As an entering argument, we don’t advocate doing anything different with your TSP,” says Sean Gillespie of Redeployment Wealth Strategies. “Just because you can’t contribute to it any more doesn’t mean you have to move it. And with low cost being one of the leading predictors of maximizing your returns, it’s darned difficult to do better than you will with TSP.”

Pros: Leaving your money in the TSP is by far the easiest option, and it’s a good option for many situations. The TSP has very, very low fees. You can move the money elsewhere later. TSP understands tax-free contributions from a Combat Zone Tax Exclusion. You can roll new money from other qualified plans into your TSP account to take advantage of the low costs.

Cons: TSP offers limited distribution options, though they are scheduled to expand this fall. You have limited investment options in TSP. You can’t roll from Traditional TSP to Roth TSP, so if you are trying to move your Traditional money into Roth accounts, it will have to be out of TSP. You can’t take multiple partial withdrawals out of your TSP account.

Roll your TSP balance into an Individual Retirement Arrangement

Pros: You have total control of how you invest your money, and unlimited investment options. You can still roll the money into a 401 (k) in the future. You can convert money that is currently in a Traditional account into a Roth account, but it will be a taxable event. And it’s really nice to put everything in one place!

Cons: IRAs don’t have any loan options, and will probably have higher fees.

5 important investments that every veteran should make

Roll your TSP balance into your new employer’s 401 (k) plan

Pros: Moving your TSP balance will streamline your accounts, and that balance will be available for borrowing with a 401 (k) loan. (But don’t do it!)

Cons: Most 401 (k) plans have higher costs than TSP. You’ll still be limited to the investment options in the new plan. There may be a waiting period to participate in your new employer’s 401 (k). Not all 401 (k) plans have a Roth option.

Forrest Baumhover, a certified financial planner with Lawrence Financial Planning, suggests caution when moving your TSP to a 401(k).

“When you leave military service, don’t be quick to jump out of TSP. It has better and lower-cost investment options than 401 (k) plans.”

Withdraw your TSP account balance in a lump sum

Pros: Cash in hand.

Cons: Withdrawing money from your TSP account may be subject to withdrawal penalties (10%) and taxes (probably in the 20% range). More importantly, you’ll lose all future earnings on that money, and you can’t replace that money into a tax-advantaged account because they have yearly contribution limits.

Transfer your TSP account balance to a qualified annuity

Pros: Predictable, guaranteed income stream for life.

Cons: It is a permanent decision. There may be high fees involved. You may not get anywhere near the full value of your contribution. If it isn’t indexed for inflation, the purchasing power of your monthly benefit will decrease each year.

This is a relatively short overview and can’t possibly cover every possible situation. As with everything, there are exceptions and nuances for many different scenarios. If you are considering moving your TSP to another investment, you may find value in consulting a financial advisor to figure out which choice is right for you and your specific situation.

Lacey Langford, AFC ®, The Military Money Expert ®, suggests several reasons why you might want to consider using a fee-only financial planner vs. the advisor offered through a bank, insurance company or investment company.

“Fee-only allows you to have a clear picture of what you’re paying for and how the advisor is being compensated for the advice and recommendations they’re giving you,” Langford added.

This article originally appeared on Military Families Magazine. Follow @MilFamiliesMag on Twitter.

MIGHTY MONEY

How to use a TSP to invest in real estate

Military members are accustomed to significant challenges. Combat tours, deployments, and frequent transfers are a few of the difficulties they face frequently. Because of this stress, many military members experience significant struggles when it comes to getting ahead financially.

Possibly one of the greatest benefits to U.S. government or military service is the Thrift Savings Plan. The Thrift Savings Plan (TSP) is a retirement savings and investment plan offered to current employees of the military and federal government.

Since it’s a “defined contribution” retirement plan, the retirement income you receive from the TSP will depend on how much you (and your agency, if applicable) contribute during your working years–along with how well your investments perform over that time. Though it offers numerous advantages for retirement savings, the TSP is an under-appreciated and under-utilized benefit offered by the federal government.

Being a service member gives you access to investment opportunities that civilians don’t. That’s a great thing! At the same time, many service members are young and haven’t had much formal financial education, so navigating the investment options to invest is tough. Though sometimes confusing, investing early is the key to wealth! I know several retired service members who made it a point to start early. They didn’t just rely on their retirement, but also bought rental properties in areas where they were stationed, and invested in taxable accounts. After 20 years, they were set for life.

Why TSP?

To start with, the TSP is cheap.

When you make any investment, the investment company is going to take some of your money as a service fee; nobody works for free. The TSP currently charges a service fee of 0.04%, which is probably the lowest you will find anywhere in the world. Even index funds, which some investors swear are the best investments, normally have service fees at least twice as high as the TSP. Most employer-sponsored retirement savings plans are at least three to four times more expensive than the TSP.

The TSP is also a tax advantage. Since the TSP is a tax-deferred or tax-qualified retirement program, you are making a deal with the IRS that you won’t use this money until you are close to retiring. In return, the IRS says it won’t tax you on a portion of that money. This is one of the big selling points of any retirement savings plan. With traditional TSP contributions, you get a tax break now and pay taxes in retirement. Conversely, you make Roth TSP contributions with after-tax dollars. So, you don’t get a tax break now, but the account grows tax-free over the years. Additionally, your withdrawals in retirement are tax-free.

Can a real estate investment be funded using a TSP?

The TSP can be invested in real estate with some conditions. The only option is to use the funds for a residential loan, which is real estate that one is living in as a primary residence. In theory, one could rent out a couple of extra bedrooms, which would be considered an investment. However, if you are still employed, you may be able to transfer some of the TSP funds to an IRA or solo 401k, which both allow for investing in real estate. If you are retired, the entire TSP balance can be transferred.

Using your funds to buy an investment property

Borrowing against your TSP contributions can be an easy way to establish a down payment and closing costs for your investment property. The loan is limited to the funds that you have contributed to your TSP account – not matching funds from your agency or service – and any accrued earnings. The loan amount must be between $1,000 and $50,000 and gets repaid at the interest rate for the G Fund at the time of processing. A $50 processing fee gets added to your loan as well.

Benefits of buying an investment property with TSP

Interest from a TSP loan gets paid to you – not a commercial lender – and payments can be taken directly out of your paycheck. When you repay your loan, you repay it with interest. The repayment amount gets deposited back into your TSP account and is invested according to your most recent contribution allocation. There’s also the option to amortize the loan as needed to change repayment details like extending the payback period for up to 15 years– which tweaks the number of payments or adjusts its amount.

How does a TSP loan work?

Loan payments are paid proportionally from your traditional and Roth balances, and from each TSP fund in which you have investments. Applying for a TSP loan is easy and there are no denials as long as there’s sufficient money in your account. If you default on your TSP loan, your credit isn’t affected– because although the remaining balance becomes taxable income, the default isn’t reported to credit bureaus. Before taking out a TSP loan, be sure you’re not sacrificing your long-term retirement goals by doing so. There are possible financial ramifications to TSP loans, including having to postpone retirement to replenish your nest egg. TSP accounts grow through contributions and compounded interest both of which are reduced by loans taken out against them. It is always recommended to speak to a financial counselor before taking out a TSP loan.

When you’re underwriting potential deals, include the payment from your TSP loan in the cash flow analysis and budget ahead of time for the payroll deduction. If it still makes sense for you after all expenses including the loan repayment, it can be an amazing opportunity to fund your investment properties.

This article originally appeared on Active Duty Passive Income. Follow them on Facebook.

Articles

DoD extends online military exchange shopping privileges to veterans

The Department of Defense announced a policy change that will extend limited online military exchange shopping privileges to all honorably discharged veterans of the military.


The veterans online shopping benefit will be effective this Veterans Day, Nov. 11.

Also read: The VA is set to lower copays for prescriptions

While shopping privileges exclude the purchase of uniforms, alcohol and tobacco products, it includes the Exchange Services’ dynamic online retail environment known so well to service members and their families. This policy change follows careful analysis, coordination and strong public support.

“We are excited to provide these benefits to honorably discharged veterans to recognize their service and welcome them home to their military family,” said Peter Levine, performing the duties for the under secretary of defense for personnel and readiness.

“In addition, this initiative represents a low-risk, low-cost opportunity to help fund Morale, Welfare and Recreation programs in support of service members’ and their families’ quality of life. And it’s just the right thing to do,” Levine added.

The online benefit will also strengthen the exchanges’ online businesses to better serve current patrons. Inclusion of honorably discharged veterans would conservatively double the exchanges’ online presence, thereby improving the experience for all patrons through improved vendor terms, more competitive merchandise assortments, and improved efficiencies, according to DoD officials.

“As a nation, we are grateful for the contributions of our service members. Offering this lifetime online benefit is one small, tangible way the nation can say, ‘Thank you’ to those who served with honor,” Levine said.

NOW WATCH: Pentagon considers lifetime access to Exchange system for vets

Articles

This little known safety net can help service members and veterans in a pinch

Finances are stressful in emergency situations, and it doesn’t matter what rank you are. From an unexpected death in the family to a broken car courtesy of the deployment curse, financial emergencies happen no matter how well you plan for them.


Fortunately for service members, their spouses, and veterans, there’s a little safety net in place for each of the services to help when these things happen, dubbed the “Emergency Relief Fund.”

Army:

The Army has the Army Emergency Relief, a non-profit that helps soldiers, retirees and families with resources in a pinch. Additionally, AER provides access to interest free loans, grants, and scholarships.

The AER is endorsed and run by the Army.

National Guard:

The National Guard has the National Guard Soldier and Airman Emergency Relief Fund, which provides up to $500 to eligible households. For more information, check out the National Guard’s publication on its emergency relief fund.

Air Force:

The Air Force has the Air Force Aid Society, and it provides emergency assistance, education support, and community programs. While the AFAS is a private non-profit, it is “the official charity of the United States Air Force.”

Coast Guard:

The Coast Guard has Coast Guard Mutual Assistance, wich is a private non-profit organization that works closely with the Coast Guard to provide interest free loans, grants, and counseling.

Navy / Marine Corps:

The Navy and Marine Corps share a relief fund called the Navy-Marine Corps Relief Society. The NMCRS is a non-profit that, though unaffiliated with the Department of Defense, can be found on nearly all Navy or Marine Corps bases.

The NMCRS is completely funded by donations and on-base thrift stores, and it provides financial assistance and counseling, quick assist loans, education assistance, health education and post-combat support, budget for baby classes, emergency travel, disaster relief, and the on base thrift stores.

American Red Cross:

For service members, family members, and eligible veterans who are not near an installation, there is The American Red Cross. The Red Cross works alongside the above mentioned aid societies to provide assistance.

MIGHTY MONEY

5 GI Bill rates that will increase this year

The Department of Veterans Affairs has announced the Post-9/11 GI Bill rates for the 2019-2020 school year. These rates will be effective on Aug. 1, 2019. The Montgomery GI Bill and Dependents’ Education Assistance programs will see a rate change on Oct. 1, 2019.

By law, the GI Bill rate increase is tied to the average cost increase of undergraduate tuition in the U.S. For the 2019-2020 school year, that increase will average 3.4%.

More than 80 percent of those taking advantage of their GI Bill benefits are doing so through the Post-9/11 GI Bill.


Private & foreign school GI Bill rates

Effective Aug. 1, 2019, those using the Post-9/11 GI Bill at a private or foreign school will see their maximum yearly GI Bill rate increase from ,671.94 to ,476.79.

Flight training

Those who are enrolled in flight schools will see their annual maximum GI Bill benefit increase from ,526.81 to ,986.72.

5 important investments that every veteran should make

An F-22 Raptor from the Hawaii Air National Guard’s 199th Fighter Squadron returns to a training mission after refueling March 27, 2012, over the Pacific Ocean near the Hawaiian Islands.

(U.S. Air Force photo by Tech. Sgt. Michael Holzworth)

Licensing/certification/national testing

You can be reimbursed up to ,000 per test for licensing and certification tests. For national testing programs, there is no maximum amount of GI Bill reimbursement. Your entitlement will be charged one month for every ,042.06 spent; currently, that trigger point is id=”listicle-2634152786″,974.91.

Correspondence courses

You can be reimbursed the actual net costs, not to exceed ,888.70 annually. That’s up from ,497.78 currently.

Monthly housing allowance

The Monthly Housing Allowance is also scheduled to change on Aug. 1, 2019.

If you are attending classroom sessions, your housing allowance is based on the ZIP code of the campus location where you attend the majority of your classes.

If you are attending classes at a foreign school, not on a military base, your maximum housing allowance will be id=”listicle-2634152786″,789.00. This is prorated based on the length of your active-duty service and how many classes you are taking.

If you attend all your classes online, your maximum housing allowance will be 4.50. This is also prorated.

Keep up with your education benefits

Whether you need a guide on how to use your GI Bill, want to take advantage of tuition assistance and scholarships, or get the lowdown on education benefits available for your family, Military.com can help. Sign up for a free Military.com membership to have education tips and benefits updates delivered directly to your inbox.

This article originally appeared on Military.com. Follow @militarydotcom on Twitter.

Do Not Sell My Personal Information