Where to put my money?

[keelerjr12]

So currently I work for a large company as a software engineer but will be leaving for the military soon.

CURRENT FINANCIAL SITUATION (by month):

Auto - $500
Clothing - $50
Food - $150
Entertainment - $250
Loan - $1500
Misc. - $450

Total Costs: $2900
Net salary: $3800
Savings rate: $900

IRA: $1500
Savings: $9000
Student Loans: $26000

Having said that, I will be making a career change in April which means by that time I will have no student debt, little savings, and most likely no car.

FUTURE FINANCIAL SITUATION (by month):

Clothing - $50
Entertainment - $300
Misc. - $500

Total Costs: $850
Net Salary: $2400
Savings rate: $1550

IRA: $420 to max at $5K
TSP: $250 to add another $3K

Now my question is, where should I put the other $880 a month? I will be in the dorms for the first 1-2 years of my military career and then most likely rent with a few guys after that. I would like to begin saving for a house/large down-payment (3-5 years down the road) and a car (want to pay in cash/buy used/drive until it dies/etc.) once I'm done with my 1-2 year long training.

I'm wondering where I should put this extra month so I can maximize gains instead of just sticking it in a savings account. Would a taxable brokerage account (mutual funds) be such a bad idea?

[MakeAStash]

Yup, many people use mutual funds, though gaining ground lately are ETFs. This link has a decent introductory guide. http://www.fool.com/how-to-invest/index.aspx

[violet80907]

Each month you will need to purchase a security (ETF, mutual fund, etc.) in order to get the money invested. Since your monthly purchase is $880, you should carefully consider the affect fees will have on your investment performance.

Lets say you pay $20 to invest the $880 each month. Thus you need to make 2.3% on the $880 just to earn back the commission. With ETF's, you only pay the commission (buy and sell). If you go the ETF route, just pick a broker with very low transactions fees. Some brokers have free trades for select ETFs. A strategy could be to pick a broker with zero fees on the ETFs you know you want.

If you go with mutual funds, be careful of the expenses. There can be expenses both when you buy the fund, and sell, as well as penalties if you don't leave the money in the fund for a certain period. Make sure you read the prospectus, understand the fees, and think about the probability you might need to access the money within any period that would subject you to higher fees.

[hellooperator]

Wrong thread, please delete this post!

[Tree0164]

If you are planning on using the money in a few years for either a car or a downpayment I would put the money in a safe place such as a saving account.