Trying to plan my retirement early

[Hebrewhomeboy]

Very early. And maybe not exactly planning it, but at least taking steps towards a good and proper retirement, and educating myself. There's a LOT I don't know about all of this stuff. Many of the people on this board are older, well educated, and financially successful, so I figured it would be a good place to get some advice.

For the record, I am currently 27 years old and I make roughly $2500/month. I live in the barracks, so I don't have to pay rent.

I am currently in the Army, and I've got 6 years in so far. I would like to retire at 20 years. The retirement I would get from that would be 50% of my base pay only. Not a ton, but probably at least $1800-$2000/month, when you factor in the raises we'll be getting over the next 15 years, and the rank I will retire at.

I recently started investing in the stock market. I don't know a ton about stocks, but I've learned a good bit from friends, and I've purchased around $1000 in shares from a few different companies, and currently my plan is to put a lot of money into a very stable company that pays dividends. GE is the company I'm looking at investing in at the moment. I am currently thinking of using these dividends as another source of income at the time I retire.

The military also has a plan called TSP (thrift savings plan), and when I retire from the army I can roll it over into a 401K. I'm not a genius when it comes to TSP or 401Ks, but I'm putting money steadily in there, so I'll hopefully have a nice big chunk o' money when I retire.

Some of you may remember the thread I started a few months back regarding my junkie cheating ex girlfriend screwing me over. Since I got her out of my life I've been able to save a LOT more money, and I'm focusing on getting my credit card and my car paid off, as they are the only debts I have. Things are going great.

So like I said, I'll readily admit that I'm no genius when it comes to this stuff. I never took the time out to learn about it before now. However, if any of you could offer me any advice, I would really appreciate it. What I would like to do is have my investments and whatnot sufficient enough for me to retire from the military after serving 20 years, and be financially set. Not a millionaire or anything of course, just stable. And after I retire from the Army, I will get another job, but I'd like to have enough retirement funds that I wouldn't HAVE to get a job if I didn't want to, or at least I could take some good time off.

[turbo6bar]

Max out your retirement accounts.

If you aren't subject to being transferred, think about business opportunities. Do you plan to stay in the same area?

Above all else, spend less than you earn. Maximize your income. Many obtain expenses and then struggle to increase income. Brainstorm NOW on how to decrease your expenses and the income problem will solve itself.

[crustychief]

+ 1 for maxing out your retirement accounts.. Use the TSP. I just retired from the Navy and wish that I had saved more when I was single. Oh yeah stay single. You are right, now is the time to be thinking about this instead of your 15th year in.

[Seahawk]

First of all, I'm happy to hear everything is going well for you. Excellent news.

You are on the right track by investing now in TSP and a 401k. The only advice I will add is to also make some investments in yourself: get a college degree or a masters degree while you are on active duty...you will be much more marketable after your military service is complete.

Look into specific military education as well to broaden your career options.

As you know, the Army has both Warrant and Officer accession programs should that be desirable to you.

All the best. You are on the right track.

[billybek]

Originally Posted by Seahawk

First of all, I'm happy to hear everything is going well for you. Excellent news.

+1!
Good to see you are back.
Some pretty good advice above, I can't add any more.
Good luck!

[old man neri]

I would not invest in the stock market while you still have credit card debt. Chances are you credit card will have a lot higher interest than you can pull from the stock market.

[Jim Bremner]

Keep it up!


Look around and find out what is missing that is needed by your fellow soldiers.

Streamlight was dot.mil guys.

Start another income base while working for Uncle Sugar! Build it up NOW.

It could be as simple as T-shirts. Just find it and do it. re-invest EVERYTHING into the company. make it grow.

keep up with the max tsp and all.

just my 2 centavos.

[Porsche_monkey]

1. Pay off your debt first.

2. Don't replace your debt once it is paid off.

3. A car loan means you have a car you can't afford.

4. Diversify your investments. G.E. on it's own is not s good idea.

5. Real estate.

6. Get by with what you need, not what you want.

[John_AZ]

Armon,
Thanks for your military career.

You did not mention your MOS (Military Occupation Specialty). Look at civilian life and examine if your current job translates to a civilian job. If not try to change your military career when you reinlist (your bargaining chip). As an example, Military Intelligence. You can work as a contract employee for the Pentagon when you retire.

Glad to hear your EX is gone.

GL
John_AZ

[targa911S]

Originally Posted by Seahawk

First of all, I'm happy to hear everything is going well for you. Excellent news.

You are on the right track by investing now in TSP and a 401k. The only advice I will add is to also make some investments in yourself: get a college degree or a masters degree while you are on active duty...you will be much more marketable after your military service is complete.

Look into specific military education as well to broaden your career options.

As you know, the Army has both Warrant and Officer accession programs should that be desirable to you.

All the best. You are on the right track.

Listen up here. Paul is a good authority on this.

[HarryD]

Armon:

Thank you for your service.

The advise is pretty standard.

As others said, pay down debt to zero. FWIW, my last car loan was in 1979 and paid off in 1981. Currently, the only debt I have is my home mortgage. I pay my credit cards off 100% every month, even if it hurts.

Get a basic savings account (your credit union on Base can help you set up a savings program to get you there) and build it up to 6-12 months of take home pay.

Put as much as you can into the TSP, it is good plan. As a young fellow, be aggressive, it will turn out ok at the end. One way to raise your contribution is to put 50-100% of your annual raise into the fund. After all, you are getting by on your current salary, chances are you will be able to next year too.

[Hebrewhomeboy]

Originally Posted by old man neri

I would not invest in the stock market while you still have credit card debt. Chances are you credit card will have a lot higher interest than you can pull from the stock market.

I've heard that before, and I understand it, however I'm afraid that in ~7-8 months when I get all my car and credit card paid off the stock market will be notably better. I feel like now is the time to buy no matter what, since prices are, in most cases, ridiculously low. Granted, I'm only putting about $200/month into the market right now. Once I get everything paid off I would like to be putting more like $800 each month into the stock market.

[Hebrewhomeboy]

Originally Posted by Seahawk

First of all, I'm happy to hear everything is going well for you. Excellent news.

You are on the right track by investing now in TSP and a 401k. The only advice I will add is to also make some investments in yourself: get a college degree or a masters degree while you are on active duty...you will be much more marketable after your military service is complete.

Look into specific military education as well to broaden your career options.

As you know, the Army has both Warrant and Officer accession programs should that be desirable to you.

All the best. You are on the right track.

I've been putting about 11% of my paycheck into TSP since my second year in. Recently I increased that to 20%.

I have two AA degrees, I'm going to work on getting a BA here shortly. Especially now that my life has calmed down, I have the time and energy to do that. My next duty station will be Korea. After that, I may go officer. The pay is certainly better, but I'll have to learn more about being an MI officer; I may not like the job itself.


Also, I'm reenlisting this month, and I should get a few grand bonus from that. That'll go into paying off my few debts, and probably about $1000 of it will go towards buying some stocks in GE.

[Hebrewhomeboy]

Originally Posted by Porsche_monkey

1. Pay off your debt first.

2. Don't replace your debt once it is paid off.

3. A car loan means you have a car you can't afford.

4. Diversify your investments. G.E. on it's own is not s good idea.

5. Real estate.

6. Get by with what you need, not what you want.

I'm usually good about not being too spendy. The Porsche being an expensive car to modify helps calm my desire to buy tons of stuff for it. I will be spending some cash to get the carerra chain tensionsers within the next few weeks though.


I'm trying my best to be diverse with my investments. Again, I'm not a stock market genius, but I'm doing my homework. I also own some of activision blizzard, one of the largest video game companies around (world of warcraft, rock band, diablo, starcraft), and ford and GM, and a little bit in BP and bank of america. I just bought some in a korean electric company, since they just agreed to build a nuclear power plant for another country; i figured their business should do pretty well. One of the most important things for me is that the stock have a relatively low price. I'm only a specialist in the army, I don't have a ton of cash, so if a stock is $100/share then I can only buy like 1 share per month. If you or anyone else has some recommendations for good, stable stocks that pay dividends, I'll gladly listen!


As far as real estate is concerned, I've heard it's a good thing to get into, but I don't have the money or the knowledge. I would have the faintest idea of what to do. I'm trying to stick with 'easier' options, ones that I have a feeling that I know what I'm doing.

[Hebrewhomeboy]

Originally Posted by John_AZ

Armon,
Thanks for your military career.

You did not mention your MOS (Military Occupation Specialty). Look at civilian life and examine if your current job translates to a civilian job. If not try to change your military career when you reinlist (your bargaining chip). As an example, Military Intelligence. You can work as a contract employee for the Pentagon when you retire.

Glad to hear your EX is gone.

GL
John_AZ

I'm a cryptological linguist/analyst. More specifically, I'm fluent (for the most part) in Korean, and a language analyst. I also have a top secret security clearance due to my job. With the job market being the way it is, I'm going to stay in the military until I hit 20 years. The pay is okay, but more importantly what money I make is mine, because healthcare, etc is free. And later on if I choose to go officer, then I'll make great money.

Also, to turbo6bar: I'll be moving every 3 years, most likely. Such are the ways of the Army.

[Hebrewhomeboy]

Can anyone give me any specific recommendations for certain stocks? I'd like a company with a good stable history, one that offers dividends, and preferably one with share prices under $50.

[John_AZ]

Dividends? IMO for the next 12 months you should put your spare savings in a bank or institution that is guaranteed by FDIC and is offering "Promo" 6-9month 3.5 to 4% interest rates. Unemployment and foreclosures will peak through spring or longer and the general economy will remain stagnent. Stock prices are a gamble.

Invest in yourself. Get your BA and take advantage of any short classes that will broaden your personal life. Cooking classes, theater, band, chorus, community involvement with non military affiliation. I took classes and had a part time job at a Shell gas station my last year.

GL
John_AZ

[Porsche_monkey]

With limited money you should consider exchange traded funds. ETF's.

I forgot 7. on my post above.

7. Carefully assess any advice you receive. Especially if you got on the internet.

[masraum]

If you're thinking of going with a stable dividend paying stock like GE, due to your age and current position (still in the early stages), I'd get into a dividend reinvestment program. You can have your dividends purchase more stock instead of paying out to you. You don't really need the "income" right now anyway, so put them to work for you. I'm not sure, but I think there may be a tax benefit to reinvestment.

[sammyg2]

Sigh, this is cut and pasted from one of my smaller fidelity accounts:

Your Personal Rate of Return from 01/01/2008 to 12/12/2008 is -46.9%

Your Personal Rate of Return is calculated with a time-weighted formula, widely used by financial analysts to calculate investment earnings. It reflects the result of your investment selections as well as any activity in the plan account(s) shown. There are other Personal Rate of Return formulas used that may yield different results. Remember that past performance is no guarantee of future results.

Seriously, put aside at least 10% of your gross income. Get used to it and you won't miss it. It is much more important to do when you are young.