27 years old. Need strong investment advise.?

Question

I am in the military, with 12 years to retirement. I have the Thrift Savings Plan. My balance is around $4,100.00 and it's all invested in the "L" fund. I invest 15% of my pay.

I just inherited about $30,000.00 and I have about $10,000.00 in debt (car mostly). My two credit cards are only around $500.00. What should I do?

I am thinking of a Roth IRA, I can contribute $4,000.00 for 2006 and 2007 for a total of $8,000.00 by April. That would leave me a balance of roughly $22,000.00. I am also think about CD's. A local bank has an advertisement for a 14 month CD at 5.17%.

Should I pay off my $10,000.00 in debt, or invest the rest. I don't want my credit score going down because I have no open accounts.

Answer 1

Cds in no way an option as you are behind & must catch up. 5.17% loses purchasing power after taxes & inlfation. A disaster for 14 months. Paying the debt infinitely better than any whthere in the IRA or not. Going to have to invest the IRA money you can put in very seriously. Nothing at a bank does you any good at all. Need equities. Feel free to contact via answers with further qs.

Answer 2

Pay off your debt first. You will probably have a very high interest rate on your card. A Roth IRA is a very smart Idea, go with it. But take care of all your credit card debt first. Credit cards have interest rates from 9-18% usually and CDs have an interest return rate of 5% max. So you'd be losing money if you put it into a CD without paying off your debt. Also, having a savings, Roth IRA, and a CD will make any company want to lend you money besides just your score. If you're looking for more ways to save money every month to increase savings or take down debt, check the webpage below.

Answer 3

Paying off credit cards does not mean you are closing accounts, necessarily. For that matter, you don't just have to write one check to pay them off. Paying a credit card to zero in a few payments (lots of companies use a 6-month benchmark for customer evaluations) will say an entirely different thing than one check and a letter saying close my account. CDs are great investment vehicles, especially at the current rates. Being in the military, you wouldn't, necessarily, want to buy into real estate because you will be moving around, but building up a financial reputation with a bank in a town that you anticipate will be your home town when you are ready to retire, that will go an amazingly long way to giving you preferential treatment when it is time to buy that home, or perhaps exercise that SBA option to veterans and open a business. If you are thinking stocks for some, may I suggest some exchange traded funds (ETFs trade like stocks) for a bit of it: NY, DVY, SPY, and PXN. These will buy you into: NY, the largest 100 companies on the NYSE; the most stable of solid dividend-paying companies in the Dow Jones index of such; the Standard & Poors 500; and the biggest players in nanotechnology, some amazing things coming from them in the near future. Good luck and stay safe.

Answer 4

Yes! Yes! Get the two ROTHs... you should have a nice future with continued savings, mil pension, IRA's.....
If you live fairly easily with the car payment, ignore it.
Sure, pay off the credit card, but don't "close " the account.
....With about 15 or 20 thou of what you got left...go to the Fidelity website...learn about " investing...mutual funds,ETF's...
you want to get some money into maybe a conservative global fund FGBLX...or an emerging market financial fund FNMIX... or a" Freedom Fund" based on your projected retirement.
Those kinds of funds should average just above or below 10% for you.( and fairly "safe")
And once you see what that kind of stuff does for you...take some profits and start looking for the 16% -21% gains.
12 to 15 years you'll be one strac troop.

Answer 5

Don't pay off the car.

You are likely to have a car payment for most of your life, so don't get out of the habit of making a car payment now. Otherwise it will be a shock to your budget when you buy a new car down the road.

Invest the money in a mutual fund - choose a good growth fund. It will in the long term return more than the interest you are paying on the car loan. I don't want to recommend specific funds, because you'd be an idiot to take that kind of advice over the internet.

Max out you thrift and your Roth, after that leave it in a taxable mutual fund account. That way you have some money to tap in an emergency.

Answer 6

The answer is yes.
yes-pay off the car
yes-pay off the cards
yes-open a Roth
yes-get a CD
yes-invest it
and an additional yes of-max out your contributions to the TSP.

Getting 5% is nice, but not while paying 8% (or what ever rate you have) for a car & 18% for a credit card. Diversify more than just the L fund. Go for the I, G, & the doestic stock funds that I cant remember right now.

Sounds like you are nicely on the way to something nice financially.

Answer 7

There is something wrong in the data given. Assume that you joined military at the age of 20, either you started investing late and you haven't given the date of starting investing your 15%. Assuming you started early at the age 20 then balance being 4100 shows you invest 50 every month and your pay is only around 333 every month which is abusurd to American standards. So more information is required in this regard.
Assuming you require around 4000 per month after retirement for the rest of your life will require you to have an amount equal to 89000 by the year 12 from now. This will require you to put aside around 5000 approximately on an yearly basis that is close to 500 monthly for the next 12 years. This can be deposited at interest rate close to the present CD rate for the next 12 years which will accrue to close to the said amount above. This at the end of 12 years you can deposit in CD or any other investment giving 5% will give you the required 4000 per month for the rest of your life.
I think ROTHIRA does something similar, check out their interest payments till maturity and from then on so that you can get an idea what you get from then on.
Some pension plans give the said above monthly payments at the end of 12 years with a lump payment now, so that your monthly contribution will be minimal. Check it out with some pension plan brokers or advisors and their prerogatives and do the needful with the 30000, so that you can lock in on the present interest rates and your future instead of struggling with large monthly payments. You can utilise that for other purpose.
Car loans you pay as you do now from pay.
Probably you need a House on retirement and you can start paying for it from your pay or you can down pay one now and rent out and let the rent pay for the house for the next 12 years. You have low credit card debt which I think you can manage with your pay. If I had more information on your monthly income then I could have done a better job for you.

Answer 8

I like your IRA plan. If you are thinking of putting your money in a CD at 5% you can get the same return on an online savings account, ING Direct or Emigrant Direct, without locking your money into a 12-14 month committment.