Investment/Financial Issues

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USMILITARY123

Member
Joined
Feb 21, 2016
Messages
18
Hello everyone,

I posted earlier about an insurance question and wanted to move a similar question to another thread to avoid confusion.

Does USNA offer opportunities to open a ROTH IRA, 401k, or similar retirement plan? I have some money saved that I am deciding if it is best to invest now or once I am at the academy. It is hard to go to a financial adviser because they are not as familiar with the military as I'd like them to be. I am as financially independent as a high school senior can right now. Is it possible to pay bills over PS? For example, I will have to continue my cell phone bill which costs a large portion of plebe pay alone. I am aware that I can't invest everything because as a plebe I will spend more than I make ($100 minus cell phone $75 leaves $25 and I'm sure it will be easy to spend that on other items at the academy). I will need to pull money somehow from my financial accounts at USNA. Is this possible and easy to do?

Thank you so much!!!
 
USMILITARY123 said:
Hello everyone,

I posted earlier about an insurance question and wanted to move a similar question to another thread to avoid confusion.

Does USNA offer opportunities to open a ROTH IRA, 401k, or similar retirement plan? I have some money saved that I am deciding if it is best to invest now or once I am at the academy. It is hard to go to a financial adviser because they are not as familiar with the military as I'd like them to be. I am as financially independent as a high school senior can right now. Is it possible to pay bills over PS? For example, I will have to continue my cell phone bill which costs a large portion of plebe pay alone. I am aware that I can't invest everything because as a plebe I will spend more than I make ($100 minus cell phone $75 leaves $25 and I'm sure it will be easy to spend that on other items at the academy). I will need to pull money somehow from my financial accounts at USNA. Is this possible and easy to do?

Thank you so much!!!
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You ARE an advanced planner! Good for you.

IRAs are independent of your employer, so USNA/Navy, no involvement. You can discuss an IRA with USAA or other financial services provider. Gotta see how much you will be getting out of your pay, especially that first year.

401k. The military/Govt version of that is Thrift Savings Plan, or TSP. You will not be eligible to contribute to that until you are commissioned as an ensign or second lieutenant.

You are smart to look at your recurring bills now. Your income will be small. You may have to go on a diet with your phone plan.

Over PS, you will have occasional access to your phone, and no access to a computer until the end of PS and you are getting ready for the start of ac year.

You can set up auto charges to a credit card, possibly a debit card. Of course, you have to pay that cc monthly. Perhaps you could transfer funds to your parents, have them pay bills for you June-August.

Again, you are a smart one to get a plan together.
 
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Once you are eligible (after commissioning) for the TSP you can opt for either a traditional or Roth option. The younger you are, the more the Roth can be leveraged to your benefit due to Time/value of money. You can also contribute much more to the TSP than an IRA. The 2016 maximum is $18,000. You can split this between traditional (for the income reduction) and the Roth option (for the long term tax free growth).

Capt MJ is right, starting a Roth or traditional IRA is pretty simple through USAA or NFCU for now. When you commission take advantage of the TSP as few investments offer better options for lower expenses.
 
Well, I was an Economics Major at USNA, went Supply Corps, Served as the Midshipmen Financial Advisor on shore duty, while I worked on my MBA and have been practicing at a Certified Financial Planner for over 20 years now, so I know a little about the topic :) In fact, I used to give seminars to the Brigade on this topic. The amount you can put in an IRA has gone up from $2,000 to $3,000 a year. I used to show the Mids an analysis that if you invested $2,000 a year beginning at age 21 for just 6 years, you would have more money at age 65, than the Mid who waited 6 years and then started investing $2,000 every year until age 65 (at the same investment return). If you start as a Plebe, you will be even further ahead (even if you don't do the full $3,000 a year. It sounds like you are a planner and researcher, so I'd recommend opening up an account with Vanguard. See what their minimums are for their funds (it may be $1,000 to start, then a small amount monthly). They have diversified retirement funds. At your age I would be aggressive growth and you'll be dollar cost averaging when the stock market drops over the years. In addition I would definitely invest in a ROTH IRA at your age instead of a Traditional IRA. You don't need the tax advantage and the growth tax free with tax free withdrawals at 59-1/2 and after will be amazing! Good luck and good thinking!
 
+1 usnagrad1988

Agree with you that a ROTH makes the most sense as previously stated due to time horizon and time/value of money for anyone this young.
Regarding Vanguard. Yes, they are among the cheapest of funds. The minimum initial investment for Vanguard Target Retirement Funds and Vanguard STAR Fund is $1,000. A $3,000 minimum applies to most other funds.

Disclosure: I am also a CFP®
 
Would this have any conflict with the new retirement system? I know it might sound dumb but I really don't know much about retirement funds.
 
My congrats as well, @USMILITARY123, for thinking about this so early. Open that Roth now! Put every cent you can spare into it and keep going. Listen to @usnagrad1988. Our Plebe will not be able to max out the IRA for a few years yet, until he has more significant income. Our annual Christmas present to him is topping off the account to the max until he is able to do that himself. (This is not a disincentive to him; he can't wait for the day he has the income to handle this himself, but we all understand the value of investing during these very early years.)
 
Our annual Christmas present to him is topping off the account to the max until he is able to do that himself. (This is not a disincentive to him; he can't wait for the day he has the income to handle this himself, but we all understand the value of investing during these very early years.)

^^^^^ what an excellent idea!!!
 
Anything you invest on your own (now OR later) will not have any impact on your military retirement plan. Agree with others that ROTH is best and if you've already paid income taxes on the money really the only way that makes any sense. DS went with a ROTH IRA with USAA upon commissioning. He took the starter loan from USAA and put whatever the max allowed for a ROTH into it. He's been using USAA for everything including auto insurance. They certainly understand the military.
 
USMILITARY123 said:
Hello everyone,

I posted earlier about an insurance question and wanted to move a similar question to another thread to avoid confusion.

Does USNA offer opportunities to open a ROTH IRA, 401k, or similar retirement plan? I have some money saved that I am deciding if it is best to invest now or once I am at the academy. It is hard to go to a financial adviser because they are not as familiar with the military as I'd like them to be. I am as financially independent as a high school senior can right now. Is it possible to pay bills over PS? For example, I will have to continue my cell phone bill which costs a large portion of plebe pay alone. I am aware that I can't invest everything because as a plebe I will spend more than I make ($100 minus cell phone $75 leaves $25 and I'm sure it will be easy to spend that on other items at the academy). I will need to pull money somehow from my financial accounts at USNA. Is this possible and easy to do?

Thank you so much!!!
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Wow can you befriend my son this summer and teach him how to invest & be financially independent. I don't think he even knows how to write a check or goto bank, sorry maybe bad parenting:( I will make sure to show this to him!
 
Blessedmom said:
Wow can you befriend my son this summer and teach him how to invest & be financially independent. I don't think he even knows how to write a check or goto bank, sorry maybe bad parenting:( I will make sure to show this to him!
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I wouldn't worry too much. My friends think I'm crazy for reading about finances during school when they're preoccupied with normal teenage things. I just always try to pick up as much information as I can so that way I can retire safely, have a family, and not have to worry so much down the road.
 
USMILITARY123 said:
I wouldn't worry too much. My friends think I'm crazy for reading about finances during school when they're preoccupied with normal teenage things. I just always try to pick up as much information as I can so that way I can retire safely, have a family, and not have to worry so much down the road.
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USMilitary, I think it is safe to say we are all enjoying your posts. Questions like these at this stage of your life tell me you are going to be the Ross Perot in your class! If you continue on this trajectory, forming the habit of investing for the long term starting in late teens, you will be, at age 30, staggeringly farther ahead than those who even start thinking about this 5-8 years from now.

I listened to those who told me to start early - "just do it" - and I am so glad I did. My parents had me managing my budget starting in HS, and did the tough love thing when I messed up.
 
Capt MJ said:
USMilitary, I think it is safe to say we are all enjoying your posts. Questions like these at this stage of your life tell me you are going to be the Ross Perot in your class! If you continue on this trajectory, forming the habit of investing for the long term starting in late teens, you will be, at age 30, staggeringly farther ahead than those who even start thinking about this 5-8 years from now.

I listened to those who told me to start early - "just do it" - and I am so glad I did. My parents had me managing my budget starting in HS, and did the tough love thing when I messed up.
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It is very reassuring to hear from so many that my efforts should pay off in the long run. Other than this, my only short term goal is to turn my USMA appointment into a USMA and USNA appointment so I may become a midshipman. Fingers crossed from here on out. Thank you all for the advice on here! I greatly appreciate it!
 
Regarding your cell phone expense, you can get 3 G of data on a Straighttalk plan for $45/month. I'm not sure if you're able to get out of your current contract, but it's worth looking into.
 
SDMom2019 said:
Regarding your cell phone expense, you can get 3 G of data on a Straighttalk plan for $45/month. I'm not sure if you're able to get out of your current contract, but it's worth looking into.
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Once you have your CAC card (military ID), you can explore a military discount. AT&T gives one.

And, if family members are asking about graduation gifts, be candid about your practical needs. Cash.
 
I am currently on Verizon on a joint plan with my sister. I plan on prepaying 12 months with her before I day until I'm out of my contract and can explore other options. Thank you for the idea!
 
Blessedmom said:
Wow can you befriend my son this summer and teach him how to invest & be financially independent. I don't think he even knows how to write a check or goto bank, sorry maybe bad parenting:( I will make sure to show this to him!
Click to expand...
Lots of good resources out there. One of the best is www.daveramsey.com I've taught his financial peace university course. You can look up locations in your area and send your son there. It's typically once a week (normally taught at churches or schools in the evenings for 2 hours) for 9 weeks. A great investment in knowledge and if you follow the 7 Baby Steps throughout life you will be successful.
 
https://usaaef.org


There is also the USAA Educational Foundation. It is a completely separate non-profit dedicated to financial management education, and makes no mention of any usaa.com products or services.

The publications are free to download or order in quantity. Topics such as Investing in Your Twenties, Money Management, Life Insurance, Planning for Retirement, Budgeting, Debt and Credit and many other topics are explained at the introductory level. Lots more.

I taught myself the basics from these when I was an ensign in the last century, long before they were online. I used them to make presentations to the enlisted personnel, as one of my collateral duties was Command Financial Counselor.
 
usnagrad1988 said:
Lots of good resources out there. One of the best is www.daveramsey.com I've taught his financial peace university course. You can look up locations in your area and send your son there. It's typically once a week (normally taught at churches or schools in the evenings for 2 hours) for 9 weeks. A great investment in knowledge and if you follow the 7 Baby Steps throughout life you will be successful.
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This is very helpful - thanks!
 
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