Planning For The Future?!

[Etheredge]

First off i would like to give you a background of the situation. Currently i am in the USMC and am married, oh also about to go to japan for three years.

Now with that being said i have decided its time for me to start actually planning where to put my money since most of my housing concerns are taken care of and i will be getting a good bit of extra money from being stationed over seas.

The main thing is i want to be able to have money saved up in the event i get out, so that way all the bills that i didnt have at the time dont smash me in the face for a reality check. Also i would like to go ahead and plan for my future with my wife by putting money aside for the house we will eventually want to buy.

As you can tell from my previous posts about CD rates i know very little when it comes to investing money or even where to save. But i am more then willing to learn. So the questions are.........

IRA's? Needed?
If So roth or traditional? (Me and my wife are currently only 21)

CDs Or Bonds? (Im not really sure what the difference are between the two)

High interest Savings Account- I have one through ING now to just store the money for a rainy day.

Thank you in advance for your help and im sorry in advance for my ignorance on the subject.

[Taribor]

Semper Fi....


Assuming your debt and emergency fund is taken care of (you don't have to worry about losing your job, but use the EF for car trouble, misc. type emergency) then you may want to increase your TSP contributions. Starting a Roth IRA is never a bad idea either.

Three years, I assume your wife is coming over with you which means you will eventually probably want to buy a cheap car over there so keep that in mind when figuring out your budget as well.

[maat55]

I recommend Roth IRA's invested in growth stock mutual funds with a track record of 12% over 10 years. You can get them through Scottrade in their NTF program among other places.

[Etheredge]

you may want to increase your TSP contributions..

I have yet to really understand what the TSP is. All i really know about it is that its a savings plan but is it worth actually using?

And yes my wife is going with me. As far as the car is concerned we currently have enough money to pay for it in cash as far as a car for 2,000 would be concerned which is fine for Oki car prices. But i was thinking that it would be smarter to just take out a loan and keep the extra money for an emergency fund.

[jasonl417]

It is my understanding the fed governmet TSP matches up to 5% of your income. This means if you put in 5% they will match maybe 50 cents for every dollar you put in as an example. This is free money. So verify that your TSP matches, I believe it does, and get your free money!!

Thanks,

Jason

[jIM_Ohio]

I believe TSP is similar to a 401k. You put in money pre-tax, government matches a portion of contribution (so you put in money, government puts in more on your behalf). If you make $20,000 and put in 5% ($1000), you are only taxed on $19,000 (20,000-1,000). You will barely notice a drop in pay (because that $80/month would get taxed and put only around $40-$60 in your pocket). And if the government matches dollar for dollar, the $1000 you put in gets a $1000 match from government, so you have $2000 invested.

I second opening an IRA. I would probably use a Roth, but could see using a deductable IRA as well. Do you see your income exceeding $66100 anytime soon (in retirement?).

If you think you will generally spend less than $66100 (in todays dollars), use the deductable and avoid paying taxes now at all costs.

If you think your income will increase above $66100 in retirement, pay taxes now, open a roth IRA, and never pay taxes again (on that money).

$66100 is the max income in 15% tax bracket. More than half the country earns less than $66100. Are you in that majority? The $66101st dollar is taxed at 25%.

As for investing, you need to decide an asset allocation.

I am 35 yo. My allocation is 72% domestic equity, 25% foreign equity and 3% bonds. Every 6 months I add 1% to bonds, but I am probably within 20 years of retiring. You won't NEED bonds unless you want to take on less risk.

My equity allocations are
domestic:
large cap 42%
mid cap 15%
small cap 15%
foreign
large cap 15%
small cap/emerging markets 10%

My bond allocation is one fund (3%) which owns about 15% foreign bonds and 85% domestic bonds and dividend paying stocks.

My blog has my holdings if you need fund recomendations.

[cooliemae]

The TSP is the government's 401k plan. You can get more information at The Official TSP Home Page, maintained by FRTIB; 2008-05-22.

For the uniformed services matching contribution eligibility is decided by the secretary of the branch. If you are eligible for matching contributions then it would be fully matched for the first 3% you invest and 50% match on the next 2% you invest. The percentage invested is based on your basic pay and does not include any incentive or special pay.