Investing/IRAs

Discussion in 'Air Force Academy - USAFA' started by zachtx, Oct 30, 2014.

  1. zachtx

    zachtx Member

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    Does anyone have any recommendations on which company/bank is ideal to start an IRA/investing account with? I have USAA, but I have heard they're not always the best for investing so I was wondering who is the best for that based on personal experience.
     
  2. AROTC-dad

    AROTC-dad Just a dad

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    Suggestions from a financial advisor....

    You are young so time is on your side. If this is for an IRA you can choose a ROTH IRA (after tax) or a traditional IRA. Because the ROTH allows you to pay the tax now and the growth becomes tax free, it is usually advantageous for a younger person to choose this route. While 401(k) IRS limits rose for 2015, IRA limits (Roth and traditional) remained the same at $5,500.

    Here is a good article about Roths.
    http://www.kiplinger.com/article/retirement/T046-C006-S001-8-reasons-you-need-a-roth-ira-now.html

    As far as institutions go, you want to use a low-cost/low fee solution. Vanguard and Fidelity both offer very low cost index type ETF's and mutual funds.
    USAA is great for regular banking and auto/home insurance. However their investments generally have higher operating costs, which will drag your long term growth.

    Use of ETF's and Funds will depend on how much you are investing....lump sum or monthly increments AKA dollar cost averaging. Visit the Vanguard and Fidelity websites. If you use a bank or a stock broker, you will end up paying a commission. If you hire a fee-only advisor, (like me) you will usually need a minimum investment level and pay a percentage of the the amount invested.

    You can do this yourself. If you want some specific individual guidance on getting started and choosing an investment, PM me.

    Good luck!

    - licensed financial advisor whose DS is a USNA candidate.

    * Note the above is considered general information for educational purposes only and not considered specific investment advice. Securities are not FDIC insured and can go down in value.
     
  3. rainstorm26

    rainstorm26 Member

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    Traditional IRAs also have to be withdrawn before you turn 70, whereas Roth IRAs can continue to build.
     
  4. Christcorp

    Christcorp Member

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    If you're looking for a company to work with, may I suggest you check out "First Command". While open to anyone, they were originally founded and catered to military personnel. They have offices usually near most military installations. They can help you with many different types of investments. Traditional and Roth IRA's, numerous funds from Fidelity, Vanguard, AMS, or pretty much any fund company. They don't have very high fees and they'll be there for you forever. No matter where you move to.

    Just one suggestion. Mike...
     
  5. AROTC-dad

    AROTC-dad Just a dad

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    +1 Rainstorm26 - No required minimum distributions.
     
  6. billyb

    billyb Member

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    Investing in the right funds via Vanguard is pretty darn easy. I wouldn't recommend using an advisor as they will cost you money (no offense Gokings) for something you can do on your own in 1 hour per year (yep, per year).

    Go here, read and learn!

    http://www.bogleheads.org/
     
  7. AROTC-dad

    AROTC-dad Just a dad

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    No offense taken, Billy. I did state that he can do this himself! In fact, I recommend it!
     
  8. parent

    parent Member

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    PM me I can send you two books that have helped me with investing for both myself and clients.
     
  9. Christcorp

    Christcorp Member

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    One other thought. I'm not quite sure what you mean by USAA not being the best for investing in? Banks and brokers who offer such investments, aren't actual "Fund Managers". They don't decide which stocks, bonds, funds, ETF, etc. to invest in. They simply handle the administrative portion for you.

    Now, it is possible that USAA doesn't offer a large enough variety of funds to choose from. That's usually a reason for not using them. But most financial institutes who have an investment section; like USAA, Wells Fargo, etc. have very little costs associated with their investment services for their banking customers. Their only downside is usually their limitation on available funds to invest in.

    Some banks and such even have their own funds, which is usually 2 or more other funds together and they rename it. But again, unless USAA just doesn't have a good enough selection, there's not much they can be "Bad at" when it comes to investing with. If you use USAA to invest in a "Fidelity Diversified International Fund" (For example), then it's Fidelity who's doing the actual investing and managing of the fund. Not USAA.
     
    Last edited: Oct 30, 2014
  10. zachtx

    zachtx Member

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    I have nothing against USAA by any means - I'm an econ major and I've just had several teachers that recommend using someone else when it comes to investing.
     
  11. Pima

    Pima Parent

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    Bullet and I invested using First Command
    ~ It was common back in our day to use them over USAA. USAA is different now. Back in the 90s it was much smaller. I don't think I ever saw a USAA ad on TV until 2005. The board was made up from retired Generals..,not known to be bankers. There was a very negative connotation among officers if you used USAA for investments and not First Command. USAA was credit card only!

    Our DS uses USAA because it has changed.

    Honestly I am not a fan of First Command because the negatives outweigh the positives.
    ~ Positives
    ~~ They review your investment annually and compare it to your retirement goals. You don't have to spend time adjusting it.
    ~~~ There is a book called Rich Dad, Poor Dad. One of the premises is hire people that are versed in the business. IE Many feel a Realtor is a waste of money, but statistically 85% of all home owners buy their home through a Realtor. Selling FSBO traditionally results in less in your pocket and longer time on the market because anyone buying without a Realtor is still going to negotiate down..

    First Commands job is to be knowledgeable regarding finances.

    ~~ The minute a child is born they have their account set up for them. You just call and tell them the name.
    ~~~ It really was that easy for us.

    ~ ~ It is one stop shopping, one withdrawal from your account to First Command.
    ~~~ Health insurance, Money market, mutual funds and IRAs.
    ~~~~ Bullets crewmate in the 111 (AFA grad Cliff Massengill) died in a crash Feb 1990. First Command delivered the check to his wife and 6 week old son within 72 hours. It is a piece of mind.

    Negatives
    ~ First Command is commission oriented. There are some great people and some that will sell their child to get you to invest more.

    ~~ Honestly, I have met too many of them! They will constantly tell you to up investments or insurance.
    ~~~ Reason why? They live on commission and just reviewing your investments annually is a waste of their time!

    ~ Every mutual fund will be a front load.

    When it comes to USAA, I would use them for certain aspects, but not all!
    ~ I would never use them for a mortgage.
    ~ I would never use them for a car loan....never have in the 26 years we have been members.
    ~ I would use them for banking and credit cards!

    In the end Christcorp is correct you can choose, but what you need to know is the cost that they will charge you for the investment and compare to other financial instituition. The management fee taken out monthly.

    You need to ask the right questions. How much is being invested directly to the account and how much is padding their pockets?
     
  12. buffalo

    buffalo USAFA 2013

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    I have my Roth IRA through Schwab, just because that's what my dad set up about five years ago. But they are pretty good and offer a large selection of no load and no transaction fee mutual funds to invest in, so I have no complaints. I don't have any active management... At this point I figure there are plenty of strong mutual funds (with low expenses) that I can invest my money into until the size of the account is larger.

    I also maintain a regular investment account through USAA. Obviously they have their own USAA branded funds you can invest in, but they also have their fund marketplace that you use to buy outside mutual funds. If you have any mutual funds you might be interested in investing in, you could look there to see if you can buy through USAA and if there are any loads or fees.
     
  13. USAFA83GradWife

    USAFA83GradWife Member

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    Also use USAA for insurance (home, car, other property). When I lived in Colo Spgs, we had a huge hail storm which destroyed my roof. My neighbors got partial payment from their insurance for their roofs and the rest once they submitted the invoice. USAA came out and wrote the whole check right on the spot. Months later, we had a huge amount of rain (think deluge). One of my windows leaked. I called USAA, they came out and said, "Must have been the hail." Then wrote me a check. I could go on and on. Best insurance company ever.
     
  14. Pima

    Pima Parent

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    The only time we never used USAA for homeowners was when we lived in AK. They were twice the amount, but otherwise we have always used them for home and car. Also personal rider insurance for my jewelry.

    Plus, now they give a great Xmas present every Dec via their subscriber accounts
    ~ I think we got @365 last year!

    Basically that check paid our insurance bill for almost 6 months
    ~ 3 cars, two kids under 21
     
  15. USAFA83GradWife

    USAFA83GradWife Member

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    Oh yah - that check is pretty sweet every year. :thumb:
     
  16. pointguard

    pointguard Member

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    I am not going to get involved in the Help-No Help debate, everyone on here appears to be an expert. Except I will adjust this thought for all, IRA's do NOT have to be withdrawn before 70. All Qualified(IRA, 401K, 403b, 457b Funds or Annuities) financial assets have a 'cannot withdrawal, W/D, without a 10% penalty prior to 59.5. The year one turns 70.5(could be the next year after 70 depending on birthday) one must start to annually W/D their RMD-Required Minimum Distribution. This calculation is based on age, gender, and total asset qualified base, and is best done by someone who understands it. The IRS will be looking for a piece of your wealth annually via Taxation of RMD's of Qualified(qualified for tax deferral) money. There is however, nothing in any Regulations that forces total withdrawals of any investment vehicle at any age.
     
  17. AROTC-dad

    AROTC-dad Just a dad

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    I interpreted Rainstorm's remark to mean that traditional IRA's require RMD's to begin at 70 1/2 and Roths do not. I did not believe that he meant TOTAL withdrawals before 70.
     
  18. pointguard

    pointguard Member

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    I didn't explain it further for you necessarily. It was in case someone who isn't the expert they suggest draws a different conclusion from conflicting information having at least the basics of the issue in an accurate plane.
     
  19. rainstorm26

    rainstorm26 Member

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    Yes, sorry, I should have been more specific.
     

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