Investing while at the Academy

Guessing its called stipend due to being a fixed amount, rather than the gross pay minus expenses.
 
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I recommend a Roth IRA in nearly every circumstance for new investors. As stated, the amount you can contribute is dependent on your earned income up to the maximum level (2022 is $6,000). You should establish the account in 2022, but you can contribute up to tax filing day of 2023 for 2022 tax purposes.

Vanguard, Fidelity, and Schwab are all great choices (full disclosure I work for Schwab). They all have lots of bells and whistles and low cost options. A key factor in investing is keeping your fees low. You should consider ETFs over Mutual Funds because of the expenses.

Your emergency fund should cover 3 to 6 months of expenses.

Make a budget.

Invest on a regular basis. Don't speculate. Pick a broad based market ETF to get started. It's all about time in the market, NOT market timing. Good luck.
 
Sealion II said:
I recommend a Roth IRA in nearly every circumstance for new investors. As stated, the amount you can contribute is dependent on your earned income up to the maximum level (2022 is $6,000). You should establish the account in 2022, but you can contribute up to tax filing day of 2023 for 2022 tax purposes.

Vanguard, Fidelity, and Schwab are all great choices (full disclosure I work for Schwab). They all have lots of bells and whistles and low cost options. A key factor in investing is keeping your fees low. You should consider ETFs over Mutual Funds because of the expenses.

Your emergency fund should cover 3 to 6 months of expenses.

Make a budget.

Invest on a regular basis. Don't speculate. Pick a broad based market ETF to get started. It's all about time in the market, NOT market timing. Good luck.
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Thanks for the recommendations..Are you still working with schwab or recommend any other? Let me know, Thanks
 
treds said:
Thanks for the recommendations..Are you still working with schwab or recommend any other? Let me know, Thanks
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I do, but I'm in management so basically I'm overhead. My recommendations above still stand You could do it all online or walk into one of the many Schwab or Fidelity branches. I'm not sure what Vanguard's footprint look like.
 
So with the new Secure 2.0 Act, for those who attend a Service Academy, provided they meet the guidelines (for example, you will have to have had the 529 account for at least 15 years and in the Mid’s name), families can now roll any 529 money that had been set aside for their Mid, directly into a Roth. This rule change was made effective Jan 1 of 2024. I did this for my Plebe last month and will do so for the next three years. 529 Rollover rule change to Roth ( this link is to an announcement on Georgia’s 529 plan, but is applicable for any state).
 
I fully expected that my son would get a full scholarship somewhere, but still set aside a large amount of savings just in case.
I remember the week after I-Day coming into that windfall and reinvesting it. It was a wonderful day.

Okay, so nothing really happened other than it went from "money for him" to "money for us" and we took a vacation. :cool:
 
Beeswax said:
So with the new Secure 2.0 Act, for those who attend a Service Academy, provided they meet the guidelines (for example, you will have to have had the 529 account for at least 15 years and in the Mid’s name), families can now roll any 529 money that had been set aside for their Mid, directly into a Roth. This rule change was made effective Jan 1 of 2024. I did this for my Plebe last month and will do so for the next three years. 529 Rollover rule change to Roth ( this link is to an announcement on Georgia’s 529 plan, but is applicable for any state).
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I was planning on doing this. How did you prove or verify (or was it necessary?) that the account was 15 years old? We have accounts that old, but much of the contributions likely came within the last 15 years....as the account is for a 19 yo. Does the account have to be 15 years or old or does the contributions need to be in the 529 for 15 years?
 
SoccerParents said:
I was planning on doing this. How did you prove or verify (or was it necessary?) that the account was 15 years old? We have accounts that old, but much of the contributions likely came within the last 15 years....as the account is for a 19 yo. Does the account have to be 15 years or old or does the contributions need to be in the 529 for 15 years?
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Well, the direction from our 529 plan is to complete their form, part of which points them where to send the money to - so you have to have the Roth up and running in your mid’s name with Fidelity, Vanguard, etc. It wasn’t hard to do through the internet. I’m a longtime Fidelity customer with my retirement and investment accounts, so we just went with them. Since it was the first time doing it, I also phoned both the 529 plan and Fidelity about what we were asking.

Once that is done, they just deposited the money directly into the account. Under the Roth umbrella you can slide it into whichever fund you want - my Plebe is 19 yo, so he has about 35 years for this to compound, so as long as it’s invested in a reasonable index, I’m fine with current market gyrations etc. I just want to make sure we max out each year he’s eligible. There’s a tipping point in investing where once you reach a critical mass of capital, the growth will be larger than any annual amount you can roll into it. That’s what I’m trying to teach DS.

As always, keep good records of the 529, the transactions made on it, the Roth, in case you or your Mid have to ‘prove’ you followed the rules.
 
We are waiting a few years to convert DS's to his Roth. He is still low enough income to contribute to Roth now, so no need to pinch his 7k/year max. Once he gets to where his income or situation no longer allows for Roth contribution, then we will sweep his 529 into the Roth. Its still growing tax free now, so no rush.
 
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