- November 18, 2023
- Posted by: legaleseblogger
- Category: Related News
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Heading 1: Personal Finance and Investment Planning as a Young Enlisted Army Member
Heading 2: Maximizing Your Bonus and Planning for Retirement as a 17-Year-Old Army Enlistee
As a 17-year-old male currently enlisted in the active-duty army with plans to ship out in July, I find myself in a unique financial position. I recently received a bonus of 42k, have zero debt, a vehicle, and around 6k in the bank. With no immediate payments to make, I am keen on making the most out of my bonus by investing it wisely, particularly in a retirement program. However, as someone with limited financial knowledge and experience, I am unsure about the best strategies for managing and growing my money.
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Furthermore, I am also considering setting up a bank account before I leave for active duty and am contemplating between Navy Federal and USAA. AI Legalese Decoder can offer me valuable comparative information on these banks, including their benefits, fees, and services, enabling me to make an educated choice that suits my financial needs as a young army enlistee.
Moreover, I am interested in setting up a life insurance policy and building my credit for the future, as well as the potential to contribute more to my GI bill, and seeking the advice of a financial advisor. The AI Legalese Decoder can provide me with guidance on all these matters, serving as a reliable and accessible source of information as I navigate through the complexities of personal finance and investment planning.
In summary, as I prepare to embark on my journey as an active-duty army member, I am grateful for the support and guidance offered by AI Legalese Decoder in managing my financial affairs and making informed decisions about my future. By leveraging this innovative tool, I can approach my financial planning with confidence and clarity, ensuring that I make the most out of my bonus and set myself up for a secure and prosperous future.
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IÔÇÖll just provide some insight from my own personal experience to do with what you will
Bonus: save a good chunk of it. My first PCS took forever to pay out and I was right on the edge of having to sell my body for cheeseburgers.
IRA: I would max out your Roth IRA for the year ($6500). You can open it with whoever. I did mine with Vanguard, but kind of wish I went with Fidelity, since vanguard can be kind of hit or miss with customer service and the app
TSP: this is one of the best investment vehicles you have after IRA. Just make sure you set where you want your money to go once you start it or else it will just sit in the G fund making no money. 75% to C find and 25% to S is pretty common advice. I just do 100% C fund. You can look up what indexes those funds track. Their expense ratios (investment costs) are super low no matter what you pick
Life insurance policy: you will have access to SGLI which is one of the best life insurance policies in existence, so I would just do that.
Bank: I use USAA and theyÔÇÖre fine for banking. I wouldnÔÇÖt get insurance through them though since theyÔÇÖre always super expensive
GI bill: i did this a while ago, but from what I remember, you pay into it your first year and then have access to it. ItÔÇÖs a super dope deal and I would suggest it
There is financial planners on many bases, but IÔÇÖve only seen them be able to talk about super basic stuff
Good luck! Best advice is to use all the benefits available (especially TA) and donÔÇÖt blow all your money on a mustang
Absolute biggest thing you can do is avoid lifestyle creep. If you make 4K a month now and live comfortably, then if you make 6K a month in a few years you want to consider saving a considerable portion of the difference instead of buying shit. Obviously everyoneÔÇÖs situation is unique, but thatÔÇÖs the biggest killer. Pay yourself first.
As fas as investing goes – do you have the matching TSP thing? If so, contribute that amount first, then max your IRA, then max the rest of the TSP, then consider I-Bonds, then put anything else in a normal brokerage account. Look for mutual funds with broad portfolios and low expense ratios, or just use ETFs. I avoid single stocks but YMMV.
YouÔÇÖll want an emergency fund of 20-30K.
Right now you can get some great deals on savings accounts at 4+%. Put the money there until you figure out what you want to do with it, and then setup a plan for the coming decades.
e: aside from SGLI I would avoid life insurance.
e2: see if thereÔÇÖs a fiduciary on base and then set up a meeting with them.
You are already well ahead of the curve for your age. Even just knowing that you should be planning is leaps and bounds ahead. What everyone has said is pretty solid. IÔÇÖd just add to make sure that you do try to enjoy your youth also. You can do this without dropping every dollar you have though. Live frugally and you will be a millionaire in no time. Always remember that what you can afford is lower than what you make. Also, cars are the worst liability you can take one. Get an easy to qualify for credit card and get started on your credit journey. I started with a chase student card.
IÔÇÖve helped a lot of soldiers with the basics of getting set up financially after I learned the hard way in a lot of ways. [A pretty solid breakdown can be found here](https://www.etf.com/docs/IfYouCan.pdf)
Depending on when you actually receive your bonus, you can set it up to pay directly into your TSP, but only up to the yearly contribution limit of $22,500. That chunk of change at your age will grow exponentially and still have half for an emergency fund plus annual Roth IRA contribution of $6,500.
I use navy fed and have boosted my credit score with responsible use and have a $20k limit on a card. The easiest was to build credit is by using a credit card but never carrying a balance, ie paying it off monthly.
YouÔÇÖre already streets ahead in terms of thinking about your financial future. Between this sub and others such as r/bogleheads, you donÔÇÖt need a financial planner if you take advantage of the info.
I’m assuming with the bonus you get half upfront and the remainder spread out over the term of your enlistment. It’s taxed heavily. With My 42k bonus I only saw 26k. Best thing imo is just roll it all into the TSP. Granted you’re not given the lump sum of front (tsp max contribution is 22,500 per year). Make it a Roth TSP, – you’re in the lowest taxable income bracket now so might as well take advantage. Put a minimum of 10% of your paycheck to go to TSP. I believe army is matching 4% of this now with the blended retirement system. And make sure you’re logging in to TSP and allocating what funds it’s going to – number #1 rookie mistake.
Banks – don’t put too much thought into this or over complicate it. Find one with no fees, no ATM fees (or does reimbursement). Could even find one with a high yield checking account (alliant CU as example). Bottom line is you just need a place for direct deposits, an easy way to transfer said cash and withdraw when needed. Could even find a bank that offers good HYSA too for the emergency fund, which btw you won’t need much given your lack of expenses amd being full time active duty.
Don’t bother with life insurance until you have dependents that rely on your income. Also you’ll get the sgli which will be more than enough for what you need.
Credit cards- just go with the one you bank with for now. Again, Don’t over complicate this. Whatever you spend, just pay off at end of month, never carry a balance. You can worry about credit card optimizations and spending later down the road.
Yes, pay into the gi bill.
Yes, talk with finance advisors on base too to get ideas.
Best of luck to you and you’re already leagues ahead of your peers. I didn’t start putting $ into my TSP until I was on my 2nd enlistment.
>My father also told me that I could put more money into my GI bill so I can get a bigger pay out.
What your father is talking about is the $600 Buy Up program for MGIB. That generates an additional $150 payment to the MGIB monthly stipend for 36 months so a really good investment – IF you use MGIB after you separate from active duty. BUT it doesn’t transfer over to the Post 9/11 GI Bill – so you would be throwing away that $600 if you use Post 9/11 GI Bill instead of MGIB.
Now there are situations where using MGIB can be the better GI Bill for some veterans – I explain that here: https://www.reddit.com/r/Veterans/wiki/education/one
So you can sign up for MGIB, pay that initial $1200 into MGIB but wait to make the decision which GI Bill you want to use when you get close to completing your enlistment contract. You can do that $600 buy-up at any time during your active duty enlistment – most SM’s are not even briefed about the $600 buy up program until they are getting ready to separate – to do the $600 buy-up program, you talk to the base education office who will do up the paperwork that you take to finance and set up the payment.
The $1200 initial payments into MGIB is normally set up as $100 per month for your first 12 months of active duty. VA will refund that $1200 to you if you use Post 9/11 GI Bill instead of MGIB. https://www.va.gov/resources/montgomery-gi-bill-refunds/#:~:text=If%20you%20didn't%20use,multiply%20that%20number%20by%201%2C200.
I have no idea on how to invest my bonus? open a roth IRA and invest it there – go with vanguard/fidelity or schwab. invest it in a s&p or total market index fund
Which bank should I go with as well? USAA or navy federal are great, doesnt matter
I would like to set up a good life insurance policy as well: i would just use your sgli that you already have, life insurance is meant to provide you with income in the event of your death, since you have no dependents it wouldnt make sense to open a new one & pay that, and do not use them as investments bc they suck as those
Best credit cards to set up later after OUST to help build my credit up: id only have 1, max 2, and only use them on essentials like gas or a bill, i would never use them to go shopping and never carry a balance
My father also told me that I could put more money into my GI bill so I can get a bigger pay out. HeÔÇÖs been out since 99 and he was reserves so it may have been different for him: i wouldnt do this, i would invest your money instead
Financial advisors. Are there on base/free financial advisors or am I better of going to the civilian sector for that?: there are but beware, they want to sell you a bunch of crap like whole life, that they get commission on. youre better off educating yourself by reading books on how to manage your finances, id do dave ramsey or someone like him
happy to help and answer any follow up questions