Outside investments

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mjedlin66
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Outside investments

Post by mjedlin66 »

Greetings,

I am 26, recently married to a 25 year old wife. We are in the middle of a move to Okinawa, I am already here and my wife is a month out. I am employed as a GS-12 engineer and she is leaving a job as an RN in the hospital back home. She is expecting to hear back about a GS-11 RN in the naval hospital soon, but will be otherwise unemployed shortly.

We own two houses. One will go up for sale next month, and the other is rented for slightly more than the mortgage payment (12 years left on fixed 15 year, 3.5%). I estimated what I will be pocketing after the house is sold, taking into account realtor fees and excise taxes. I estimate that once all of our bills are paid, and we max both of our IRAs and my TSP, that we will have 30-40k to invest. I plan on maxing both IRAs and both TSPs (assuming she gets picked up by the hospital) for the rest of our careers. So I am suddenly faced with 30-40k that I have to invest in something other than the only investment vehicles I have ever known (other than real estate).

We have about 30-40k in combined student loan debt, so the idea of being debt free is certainly appealing. However, we have both been aggressive with our high-interest loans so the remainders are all 3-6% that we could easily pay off in the next 2-3 years. I think that we could beat 3-6% return with an outside investment.

What do you recommend? We have no problem putting this money away in high risk for the LONG haul. We are young, and we don't need it. It is a good problem to have.
Owner/creator of TSPcalc.com - "Know your numbers"

crondanet5
Posts: 4324
Joined: Tue Aug 19, 2008 8:51 pm

Re: Outside investments

Post by crondanet5 »

Pay off all your debts as quick as you can. Hopefully your wife gets the GS-11 position. But think about your family timeline. Best to go into family mode debt free. Is Okinawa a permanent job location?

betterdeal
Posts: 3
Joined: Wed Jan 12, 2011 11:52 am

Re: Outside investments

Post by betterdeal »

I say pay your debt off. You may not have this opportunity again for several years if ever.
I have paid my share of stupid tax. Pay all debt and don't ever go back in debt for anything.

Good Luck

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sunny2012
Posts: 42
Joined: Tue Mar 06, 2012 8:13 am

Re: Outside investments

Post by sunny2012 »

I agree with what everyone has said so far about debt...pay off the debt 1st...especially the student loans. I know people say student loans are a "good debt" but you never know about what your future holds for your job situation. For me, personally, student loans have been of the devil. The repayment has been a process from the pits of hell. Pay off that debt while you have the extra money and THEN invest.

Make sure you have a good, healthy emergency fund. Are you prepared for an emergency that could happen now? Whatever investment channel you choose, hopefully it's one you can get to your funds quickly if you need them for an emergency and won't be penalized if you withdraw the money.

Charitable contributions - help yourself with your taxes. If you find a good organization that represents what's important to you, it's a tax advantage to give. It's an investment of another type. :)

If you have children or plan on that, will you have a college fund, like a 529 set up for them? I'm sure you've already thought of all that.

Just some of my thoughts about what I would do if I had extra funds.
I'm just making this up as I go along.

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mrmaxd
Posts: 137
Joined: Wed Aug 27, 2014 9:51 am

Re: Outside investments

Post by mrmaxd »

Ditto, Pay off the debt. The extra earnings potential of investing for a better gain is not worth the peace of mind of being debt free. If you don't like being debt free it is very easy to change it. Not so vice a versa.

skiehawk11
Posts: 2116
Joined: Wed Jan 05, 2011 2:32 pm

Re: Outside investments

Post by skiehawk11 »

Definitely pay off debt. even though you could possibly make more than 6% in an investment, you have a guaranteed return of the average of your student loan payments plus you'll have increased liquidity with lower debt. Also, there's the psychological factor of having less debt. It's awesome. :)

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PileDriver
Posts: 10
Joined: Mon Oct 29, 2012 1:19 pm

Re: Outside investments

Post by PileDriver »

Another vote for paying off debt.

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ArrieS
Posts: 1072
Joined: Sun Aug 05, 2012 10:56 am

Re: Outside investments

Post by ArrieS »

mjedlin66 wrote:What do you recommend?


Well, do you have a plan for if she doesn't get the job? You talked a lot about what you'll do if she get's it but nothing about if she doesn't.

What would it look like if she didn't get the job?

Also,

Have you asked about help with your student loans? I have a feeling your organization may have something in the lines of 10K for a three year commitment. Just check if you can get someone else to pay your debts for you first. Just remember you'll owe tax on that money.
OCTOBER: This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August, and February. - Pudd'nhead Wilson's Calendar

Scorpio70
Posts: 432
Joined: Thu Dec 24, 2015 11:49 am

Re: Outside investments

Post by Scorpio70 »

My wife and I follow Dave Ramsey, and the other guy before him. Paying off debt is a big weight off the shoulders. You have a freedom that is hard to describe. My vote is always try to be debt free.

fccannon5
Posts: 2
Joined: Tue Jul 09, 2013 11:02 am

Re: Outside investments

Post by fccannon5 »

Put the max in a HSA (another tax shelter) then pay off the debt.

OkieTSPer
Posts: 119
Joined: Mon Jun 06, 2016 2:44 pm

Re: Outside investments

Post by OkieTSPer »

Pay off school loans first, they always feel like an axe over your head. Then see how much is feasible to invest. If your wife does get that job, the faster the debt can be eliminated. Good luck. And by the way, Okinawa is such a beautiful place.

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Aitrus
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Re: Outside investments

Post by Aitrus »

I agree with all of the above about paying off debt first, and have a nice big emergency fund. It seems like you have multiple retirement accounts going, and that's fantastic. If I were in your shoes, I'd also spend a couple of years building up a 1-2 year emergency fund. After that, you have several options. I would suggest looking at dipping your toes into any of the following (depending on your goals and desires):

- Start building a legacy. One way to leave a legacy is to build up a trust fund that pays out after you die. For example, I love chess. One of my goals is to leave a small trust fund for the local chess club that I'm a longtime member of. That trust fund will ideally donate prize money for tournaments and fund a modest annual scholarship for prospective local high school chess players headed into college. It's something that will benefit others for years after I'm gone and will leave a legacy for my progeny to be proud of. Other ideas: buy land and build a park on it, build an animal shelter, become a Secret Santa for local orphanages, etc. Whatever your passion is, you are young enough to be able to devote a lifetime to furthering something you love while still investing enough for a comfortable retirement.

- Real estate, if that's your thing. Only pay in cash and negotiate for good deals (to the tune of 25 - 30% off the listing price is certainly possible for those who are desperate to sell). Use the fact that you're paying cash to get them to lower the price, get a managing company to deal with the renters, then you can have an income stream for the rest of your life.

- Investing in dividend-paying individual stocks. Do some research on companies that have reliably paid dividends on their stocks, and that will be around for a long, long time. 3M, for example, has paid out dividends nonstop since 1916. It's a stock that you could buy and hold on to forever because it's a company that makes products that will be in need for daily business and life for decades to come, and they are innovative and adapt with the times by putting out new products to meet new needs. Source: http://investorplace.com/dividend-paying-stocks/

Research DRIPs, learn the difference between preferred and common stock, and the awesomeness of stock splits. You have enough extra money that you can afford to invest in companies that will pay out dividends forever, and that can be signed over in your will to your next of kin. It's fun to keep track of your favorite companies that you have stock in, kind of like following a favorite sports team. It's also a great way to teach kids about the stock market - Coca-Cola, Yum!, Hershey, Hasbro, McDonald's, Disney, Lego...lots of companies have DRIPs that are very cheap and are ideal as a way for kids to "invest" and learn under a parent's tutelage. Then the stock can be signed over from the parent to the child when they come of age, and they then have a head start on having something for retirement.

- Liens - If you like a challenge, you can learn about the lien process. In short, if somebody owes back taxes or fees on their property, those accounts earn interest on what's owed. This process usually happens at the county or city level, so some online research is needed because counties will hold auctions on accounts that have back taxes or fees owed. If you bid and win, you then pay off those taxes and accumulated interest up that point for the owner. Then the owner then owes the taxes/fees/interest up to that point to you, plus further interest at the same rate as they owed to the county. If they don't pay off within a certain amount of time (usually measured in years), then you become the owner of whatever they owe the taxes on. If they do pay off the amount to you, you get your money back plus any accrued interest going back to the day you won the bid. This process works because the county / city wants it's money now, and you can afford to wait for the owner to pay up or give up the property. Get your money back plus interest, or get the property. Either way, you win (in 99% of circumstances).

- Bank sales - Also a challenge - you can keep up on when banks have sales on repossessed property, vehicles, etc. Buy them for cash and way below value, remodel if necessary, then resell at or below market value but still above your bottom line for a profit.

- Franchise a business. If you want to work for yourself, you can franchise a business. Let's say that you love a certain fast food restaurant, but there isn't one in your town. You can be the one to bring that delicious food to your town.

There's tons of options once you're debt free, have extra money, and have tons life left with which to accomplish something special.
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mjedlin66
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Re: Outside investments

Post by mjedlin66 »

Aitrus wrote:I agree with all of the above about paying off debt first, and have a nice big emergency fund. It seems like you have multiple retirement accounts going, and that's fantastic. If I were in your shoes, I'd also spend a couple of years building up a 1-2 year emergency fund. After that, you have several options. I would suggest looking at dipping your toes into any of the following (depending on your goals and desires):

- Start building a legacy. One way to leave a legacy is to build up a trust fund that pays out after you die. For example, I love chess. One of my goals is to leave a small trust fund for the local chess club that I'm a longtime member of. That trust fund will ideally donate prize money for tournaments and fund a modest annual scholarship for prospective local high school chess players headed into college. It's something that will benefit others for years after I'm gone and will leave a legacy for my progeny to be proud of. Other ideas: buy land and build a park on it, build an animal shelter, become a Secret Santa for local orphanages, etc. Whatever your passion is, you are young enough to be able to devote a lifetime to furthering something you love while still investing enough for a comfortable retirement.

- Real estate, if that's your thing. Only pay in cash and negotiate for good deals (to the tune of 25 - 30% off the listing price is certainly possible for those who are desperate to sell). Use the fact that you're paying cash to get them to lower the price, get a managing company to deal with the renters, then you can have an income stream for the rest of your life.

- Investing in dividend-paying individual stocks. Do some research on companies that have reliably paid dividends on their stocks, and that will be around for a long, long time. 3M, for example, has paid out dividends nonstop since 1916. It's a stock that you could buy and hold on to forever because it's a company that makes products that will be in need for daily business and life for decades to come, and they are innovative and adapt with the times by putting out new products to meet new needs. Source: http://investorplace.com/dividend-paying-stocks/

Research DRIPs, learn the difference between preferred and common stock, and the awesomeness of stock splits. You have enough extra money that you can afford to invest in companies that will pay out dividends forever, and that can be signed over in your will to your next of kin. It's fun to keep track of your favorite companies that you have stock in, kind of like following a favorite sports team. It's also a great way to teach kids about the stock market - Coca-Cola, Yum!, Hershey, Hasbro, McDonald's, Disney, Lego...lots of companies have DRIPs that are very cheap and are ideal as a way for kids to "invest" and learn under a parent's tutelage. Then the stock can be signed over from the parent to the child when they come of age, and they then have a head start on having something for retirement.

- Liens - If you like a challenge, you can learn about the lien process. In short, if somebody owes back taxes or fees on their property, those accounts earn interest on what's owed. This process usually happens at the county or city level, so some online research is needed because counties will hold auctions on accounts that have back taxes or fees owed. If you bid and win, you then pay off those taxes and accumulated interest up that point for the owner. Then the owner then owes the taxes/fees/interest up to that point to you, plus further interest at the same rate as they owed to the county. If they don't pay off within a certain amount of time (usually measured in years), then you become the owner of whatever they owe the taxes on. If they do pay off the amount to you, you get your money back plus any accrued interest going back to the day you won the bid. This process works because the county / city wants it's money now, and you can afford to wait for the owner to pay up or give up the property. Get your money back plus interest, or get the property. Either way, you win (in 99% of circumstances).

- Bank sales - Also a challenge - you can keep up on when banks have sales on repossessed property, vehicles, etc. Buy them for cash and way below value, remodel if necessary, then resell at or below market value but still above your bottom line for a profit.

- Franchise a business. If you want to work for yourself, you can franchise a business. Let's say that you love a certain fast food restaurant, but there isn't one in your town. You can be the one to bring that delicious food to your town.

There's tons of options once you're debt free, have extra money, and have tons life left with which to accomplish something special.


Now that is one heck of an informative post. Thank you, Aitrus.
Owner/creator of TSPcalc.com - "Know your numbers"

ngood2345
Posts: 58
Joined: Mon Mar 09, 2015 6:13 pm

Re: Outside investments

Post by ngood2345 »

Pay off your debts / loans, but only if you are sure you can save at least 10% above the TSP matching. It has been shown time and again start early, very early. You want to have enough, between pension, SS and 401K, to replace both of your take home pay at retirement. Pay off all your debts before retiring.

If you pay off your debt / loans, will you have enough to put down to buy a home? If not then pay off the high interest debt first and use the rest for the home.

You will need to live uncomfortable to retire comfortable.

This is a great site to get you started for retirement.

Good luck,

TSPBuilder
Posts: 256
Joined: Tue Jun 19, 2012 2:14 pm

Re: Outside investments

Post by TSPBuilder »

mjedlin66 wrote:
Aitrus wrote:I agree with all of the above about paying off debt first, and have a nice big emergency fund. It seems like you have multiple retirement accounts going, and that's fantastic. If I were in your shoes, I'd also spend a couple of years building up a 1-2 year emergency fund. After that, you have several options. I would suggest looking at dipping your toes into any of the following (depending on your goals and desires):

- Start building a legacy. One way to leave a legacy is to build up a trust fund that pays out after you die. For example, I love chess. One of my goals is to leave a small trust fund for the local chess club that I'm a longtime member of. That trust fund will ideally donate prize money for tournaments and fund a modest annual scholarship for prospective local high school chess players headed into college. It's something that will benefit others for years after I'm gone and will leave a legacy for my progeny to be proud of. Other ideas: buy land and build a park on it, build an animal shelter, become a Secret Santa for local orphanages, etc. Whatever your passion is, you are young enough to be able to devote a lifetime to furthering something you love while still investing enough for a comfortable retirement.

- Real estate, if that's your thing. Only pay in cash and negotiate for good deals (to the tune of 25 - 30% off the listing price is certainly possible for those who are desperate to sell). Use the fact that you're paying cash to get them to lower the price, get a managing company to deal with the renters, then you can have an income stream for the rest of your life.

- Investing in dividend-paying individual stocks. Do some research on companies that have reliably paid dividends on their stocks, and that will be around for a long, long time. 3M, for example, has paid out dividends nonstop since 1916. It's a stock that you could buy and hold on to forever because it's a company that makes products that will be in need for daily business and life for decades to come, and they are innovative and adapt with the times by putting out new products to meet new needs. Source: http://investorplace.com/dividend-paying-stocks/

Research DRIPs, learn the difference between preferred and common stock, and the awesomeness of stock splits. You have enough extra money that you can afford to invest in companies that will pay out dividends forever, and that can be signed over in your will to your next of kin. It's fun to keep track of your favorite companies that you have stock in, kind of like following a favorite sports team. It's also a great way to teach kids about the stock market - Coca-Cola, Yum!, Hershey, Hasbro, McDonald's, Disney, Lego...lots of companies have DRIPs that are very cheap and are ideal as a way for kids to "invest" and learn under a parent's tutelage. Then the stock can be signed over from the parent to the child when they come of age, and they then have a head start on having something for retirement.

- Liens - If you like a challenge, you can learn about the lien process. In short, if somebody owes back taxes or fees on their property, those accounts earn interest on what's owed. This process usually happens at the county or city level, so some online research is needed because counties will hold auctions on accounts that have back taxes or fees owed. If you bid and win, you then pay off those taxes and accumulated interest up that point for the owner. Then the owner then owes the taxes/fees/interest up to that point to you, plus further interest at the same rate as they owed to the county. If they don't pay off within a certain amount of time (usually measured in years), then you become the owner of whatever they owe the taxes on. If they do pay off the amount to you, you get your money back plus any accrued interest going back to the day you won the bid. This process works because the county / city wants it's money now, and you can afford to wait for the owner to pay up or give up the property. Get your money back plus interest, or get the property. Either way, you win (in 99% of circumstances).

- Bank sales - Also a challenge - you can keep up on when banks have sales on repossessed property, vehicles, etc. Buy them for cash and way below value, remodel if necessary, then resell at or below market value but still above your bottom line for a profit.

- Franchise a business. If you want to work for yourself, you can franchise a business. Let's say that you love a certain fast food restaurant, but there isn't one in your town. You can be the one to bring that delicious food to your town.

There's tons of options once you're debt free, have extra money, and have tons life left with which to accomplish something special.


Now that is one heck of an informative post. Thank you, Aitrus.



I wish I'd had someone give me this piece of advice around 25. The best I found was to max out through work, then IRA's and then annuities. Looking back on it, I wish I would have invested and used the excess to fund things like the above. With an extra $6,000 to $18,000 (not counting Uncle Sam's yearly installment of taxes :) you could start a lot of those neat projects and still pay down your debt. Don't forget to enjoy the journey while you are working toward the end goal.

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Fund Prices2021-05-07

FundPriceDayYTD
G $16.58 0.00% 0.43%
F $20.72 0.00% -2.27%
C $63.32 0.75% 13.24%
S $82.16 1.32% 10.72%
I $38.76 1.29% 9.51%
L2065 $13.84 1.02% 11.49%
L2060 $13.84 1.02% 11.49%
L2055 $13.84 1.02% 11.49%
L2050 $28.21 0.84% 9.30%
L2045 $12.88 0.79% 8.73%
L2040 $47.05 0.73% 8.19%
L2035 $12.44 0.67% 7.54%
L2030 $41.46 0.61% 6.91%
L2025 $11.77 0.48% 5.47%
Linc $22.89 0.23% 2.76%

Pending Allocations

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