I saved $35K while being deployed to Iraq, what should I do with the money?

Question

Any financial/investment tips? I'd like to make it grow somehow. The only debt I have is about $10,000 from student loans at a pretty low interest.

Answer 1

Congratulations for having saved 35K! And for living to tell about it.

The most important thing is to educate yourself about finance/investment so that you don't have to depend on other people's advice so much. There is tons of free stuff in the library + on the internet.* Spend the next few months educating yourself - it's definitely worth the investment. Do NOT rely on random stock/fund picks! Educate yourself until you're able to do your own background checks and make your own judgment call on such advice.

There are many ways to grow money - stocks, bonds, funds, ETFs (the current rage), commodities trading, real estate, etc. You'll have to find the approaches that you're interested in and most comfortable with - NOT the one that has the fastest and most potential gain. Focus on doing and developing what you can potentially do best. You'll learn faster, be more confident (& probably more successful), and also sleep better at night.

While you educate/train yourself, temporarily park your money in an online savings account with 5%. Don't be in a rush to invest and send in your 35K troops - when you go in, you want to be going in prepared and with good intel.

If you're going to enter the stock market in ANY way via stocks, indexes, mutual funds, ETFs, etc., do your research + an extensive recon mission first, so to speak. You're probably going to have to learn the basics of corporate, industry, micro/macro, and global economics - not a bad thing, actually. Takes time, but it's very useful for understanding business, and might come in handy if you're planning your own in the future.

Scout websites for the best picks, brokerages, strategies, past performances, reviews, etc. Study the great stock pickers (generals). Create a ghost online portfolio (YHOO is good enough). Then target & track - but don't actually pull any buy triggers just yet. See how you perform, as well as how you feel about it, and analyze your calls. Refine your judgment and technique.

The stock market is currently at its all time highs, so it's probably not going to make much of a difference if you wait a couple months while you formulate an investment (attack) strategy. There will always be opportunities to make money, because you can either bet the market will go up (Long), or down (Short). Long-term they tend to go up, but past performance doesn't guarantee future results. The stock market is a goddamn war, so it pays to study it first before entering the fray. It's very survivable for experienced or knowledged hands, but for newbies it can be devastating.

One last thing: investing your money isn't the only way to grow money. Saving is a great way, too. If you become a hardcore Spartan saver and achieve a high savings rate of 40-60% or more of income, you can build a solid investment base relatively quickly. If you get/have a job, and cut all your living costs to a bare minimum and manage to save 1K/month, you can pull in 12K/yr. In 2 years, that's 24K. As you save, roll it into your investments. The bigger your initial base, the faster and easier it is to grow. But if you only spend a little on your base and waste the rest on unnecessary spending, it's going to take you a long time to establish a successful, thriving investment operation.

Personally, I'd also pare down that student loan debt, even though it's "low interest". Unless you're confident of making gains greater than the loan interest (which probably shouldn't be difficult), it is still costing you money. You can consider halving it right now, and then use future savings to pay it off. But that's just me - I'm not a fan of debt.

Best of luck on your investment mission -

*It's unfortunate and even idiotic that our schools don't provide mandatory basic financial education, given that money is one of the most important things in our society.

Answer 2

The third answer from John T is good.

Are you in the Thrift Saving Plan (TSP)? It is a great plan although since I am not a federal government employee or military, I can't get in it. Otherwise, I would be using it myself. Put the max you can in there. There are five options to choose from in the TSP. I would recommend you go with the equity (stock) index fund (sorry, but I don't remember what they call that in the TSP) because I assume you are pretty young and those usually have the highest growth long term. Then, like John T said go to either Vanguard.com or TIAA-Cref.org and buy an equity index fund with the rest. I would not buy a fund from and "advisor" because those are almost always salespeople working on commission who are more worried about making money for themselves instead of you so they sell you funds with high commissions which then come out of YOUR money. That is what a "load fund" is. If you go to the two sites I gave you you can buy funds which perform just as well, or better, and you do not have to pay a commission which they call a "load" just to confuse novice investors.

If your loans are at a pretty low rate, I would just pay them back on schedule and not ahead of time. Over time, with an index equity fund you should average (not every year, they go up and down) about a 10% return. While bonds will not have the variability of the equity (stock) fund you will also not get the same high returns so unless you are really risk adverse I would not recommend those to someone relatively young.

Whatever you do, do not spend it on a new, fancy car! What a waste that is! If you use no-load, equity mutual funds with low management fees this money will grow a LOT over the years.

One thing you should buy (or take out of the library) is an investment book if you are not going to look it all up on the internet which is also possible. Tyson's "Investing for Dummies" is a good one to start with. If you want to buy it, buy it USED on Amazon.com! You really need to get more educated that what we can provide on Yahoo answers but I assume this is just a starting point. I mean, $35,000 is a lot of money. Although, I am giving you some priceless advice here. ;-)

Investing smart is really not very hard. A lot of the advisors on TV and in person make it sound harder that it is so they can earn a living selling advice. Unless you decide you want to devote an enormous amount of time and energy to it, do not buy individual stocks. Way too risky for those who do not do it all the time. Use a mutual fund and you will be diversified ie. not have all your eggs in one basket. And do not buy any whole life insurance plans. Those also mainly make money for the people selling them. And the military already has good insurance for you. Anytime anyone spends a lot of time trying to sell you something like that, assume it is because it will make them money, not you. The WORST used to be First Command which completely ripped off a bunch of soldiers by selling them investments with ENORMOUS commissions but were not upfront about them.

You also might want to look into a Roth IRA because what you put in it grows tax-free until you retire and you can take your contributions out to buy a house, for example. If you do a Roth IRA the money in this tax shelter can then be invested in an equity (stock) mutual fund as well. Oh, and an equity mutual fund just puts lots of different investors' money together and buys a bunch of different (hundreds sometimes thousands) stocks with it for them in case you didn't know that.

Good luck! I work with soldiers for a subcontractor for the military on various bases in Germany which is why I know about the TSP.

Answer 3

I'm guessing that you don't have any needs for current income.

I would go to Vanguard and buy some index funds. The total stock market index, and total bond index. If you are, say 25 or so, I would probably go 100% into the total stock market index - emulates the Wilshire 5000. If you are in your thirties, put in more toward bonds.

You will probably want something that has foriegn equities. Many times the foriegn markets do well while America's doesn't.

Read up on the major indices that have been around for thirty or more years - like the Standard and Poor's 500. Then buy a fund that emulates that. You will make that market average, which will beat 80% of the actively traded funds.

Buy a no load fund, and find one with a low expense ratio.

For the love of God, don't buy an annuity.

Finally, I would like to thank you for your service for our country.

Answer 4

35k is not a hell of a lot of money, atleast not something you can retire on.
What can you depends on your risk profile

1) If you are super conservative and dont want to see any loss in your equity, consider CD's, Bonds. They will not pay you much but your principal amount is safe.
2) If silighly aggressive : Try out the different mutual funds on offer, the money is appreciating quite nicely.
3) Aggressive : Go for individual stocks and forex is a nice option. However you need to be financially educated to do these investments. Prepare for volatility in your equity. If you dont like taking risks and dont like seeing a dip in your equity, forget this.

These are the usual methods of investing for most people. If you take the time to talk and shop around you can get a better deal as with other things in life. It might mean making a few more for little bit more effort.
Its your money, invest wisely and a little risk never hurt anyone.
No risk, no rewards, No pain, no gain.

Let me know if I can help.

Answer 5

Give some back to your colleagues who lost limbs or were terribly wounded on the battlefield. Invest in any company involved with the War in Iraq - like KBR, Boeing, Lockheed Martin, Exxon Mobil, etc. Maybe invest in some Kurdistan startup companies - I saw on 60 Minutes how peaceful the Kurds were living without terrorism or sectarian violence.

Answer 6

Stick with the third answer and also bookmark some money for a house. Make sure if you are buying a home, put 20% down so you do not have to pay PMI (property mortgage insurance).

Answer 7

donate them to the charities & to the government, well unless you are not loyal to your country, bet you were in it for the money...shame.