Investing while at the Academy

Discussion in 'Air Force Academy - USAFA' started by 808DAD, Sep 24, 2015.

  1. 808DAD

    808DAD Member

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    My C3C DS asked me an interesting question about a week ago. He asked me about investing. I was proud to hear that he is thinking about his future and impressed that a 19 year old would think about putting his money away instead of what car to get. When I started my career I invested in a deferred compensation account and later started a Roth IRA. My question is where could he get information on this while at the academy or who he could contact to start investing. He already has a USAA account but I'd don't know how successful they are in regards to deferred compensation and Roth IRA accounts. Thank you.
     
  2. hornetguy

    hornetguy USAFA Cadet

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    USAA has a solid portfolio for investment options in a Roth IRA and the interface is easy as pie. USAA has financial advisors that can assist him in setting up the account - but it's also very easy to do on his own (USAA IRA link). He can call USAA and ask for an advisor (210-531-8722).

    The mins are usually $3000 to buy into a mutual fund (he can start the IRA account with any amount obviously) BUT he can elect to have a monthly automatic deposit for $50 and that is also sufficient to begin investing in most of the funds. Several of the funds have a Morningstar rating of 5 stars and perform well. While fidelity or some of the others might do marginally better in some years on their funds, the USAA interface is much easier to use and every account comes up on one dashboard. And its easy to manage on the mobile app.

    I've had a Roth IRA with USAA since I was a C3C as well. It's been awesome, I've saved so much, and glad I started early. These days I enjoy my USAA 401K, but that Roth account looks pretty now!

    What's nice is that he will be able to take the USAA career starter loan as a C2C. While I couldn't max my IRA as a C3C, the career starter loan let me max two years right away when I got it. Huge helper!

    Again, USAA's mission is to help every single member secure their financial future! I encourage him to call and ask for a financial advisors. The financial advisors work only on salary, have no incentives to sell products, and their mission is to help members make sound financial decisions. Even if you don't want to take their funds advice, they can provide great information on USAA investment, retirement, and other products and see how they align with financial goals. They can get him started with an IRA no sweat.
     
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  3. 808DAD

    808DAD Member

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    Thank you for the info. I will pass it along.
     
  4. vshun

    vshun Member

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    This question belongs to bogleheads forum, but the short answer is, I suggest Roth IRA with Vanguard, such as LifeStrategy 2060 fund or similar and forget it. This is lowest expense diversified investment mix of index funds which will combine stocks and bonds in "set it and forget it" cruise control type of investment strategy.
     
  5. Stealth_81

    Stealth_81 Super Moderator Moderator Founding Member

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    My son started investing at the Academy as well. He invested his starter loan by maxing his Roth IRA for two years like Hornet did and then taking the balance and spreading it into three other funds through USAA. He grew it enough to buy a house while stationed at Luke. When he moved he kept the house and bought another one in Florida. He is making money on both houses and still keeps all of his investment funds through USAA. He likes his contact at USAA and says that he is great to work with and understands his needs since my son likes to be very involved in keeping up on his money. The only thing that he doesn't use USAA for is his mortgage.

    Stealth_81
     
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  6. USMC_Ordie

    USMC_Ordie Member

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    DS is a C3C as well. He started asking about while in High School actually, but I had him hold off just because he didn't have any real income. He did however always put his savings into a CD in his student accounts.

    Apparently, Investing is a thing at USAFA, and since he's an Econ Major, there are quite a few of those around him doing it as well. I get an update every week or two. He has his purchase strategies as well as exit strategies for each acquisition. He seems a lot more educated about it than I ever was.

    I can honestly say, when I was 19 (back in the late 80's), and in the Marine Corps..... 'Investing' was not exactly the 1st thing on my mind....
     
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  7. g041rf0rc3

    g041rf0rc3 Member

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  8. Christcorp

    Christcorp Member

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    The thing is, at 22 years old when you graduate the academy, you have time on your side to invest in your future. That doesn't mean time to WAIT. It means you don't have to play catch up and invest $10,000 per year. If after graduation and getting commissioned, if you invest in TSP (similar to a 401k), you can invest a modest amount each month that will accumulate greatly over the next 40 years. Literally netting you over a million dollars.

    As for while at the academy, the key is how much you spend and what will you do with an almost zero percent loan that you have access to. Even with as little money as you make while a cadet, there is absolutely no reason that you can't save enough in those four years to get you started off at your first base with an apartment, furniture, etc. You can easily have $10,000 saved up by graduation day. Unless of course you spend it all. But saving an average of $2500 per year is very easy and doable.

    Then, with the next to zero percent loan, you can max out a Roth IRA each year for 5 years, have enough plus some of what you saved for a good used car, and by the time your 5 years is up and the loan is paid off, you will be totally debt free with a great start towards your retirement.

    Of course, there will be those who will live beyond their means and/or make very stupid financial decisions. There will be those that spend all their money each month and not have anything saved. There will be those who take the $35,000 loan and buy a new car. These cadets, I don't know what to say about. Finances are something some parents and schools teach kids while growing up, and they have a sense of fiscal responsibility. Some kids, because of their parents and upbringing will live beyond their means, not save, and live paycheck to paycheck. I've seen many enlisted who make a fraction of what officers make, in much better financial situations. I've also seen many officers who are responsible and have a very good life because they balanced their spending and savings. Of course, I've also seen many captains and majors who also had maxed out credit cards, large car loans, and nothing in savings.

    Life is not worth living if you save everything and don't get to enjoy life. You should be able to take vacations, spend money on your kids, splurge occasionally, etc. but you need to balance that with saving for the future. Saving for your kids college, a house, retirement, etc. but if you really feel you need that $60,000+ corvette or Lexus instead of the $20-$25,000 car, go for it. You're the one who needs to determine your own self esteem and worth. Best of luck.
     
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