Financial Advice

I spend a lot of time browsing FR, and have noticed a lot of FReepers have a lot of knowledge/opinions pertaining to finances. There also appears to be a good number of Freepers who are about retirement age with a good conservative viewpoint. Taking into consideration current events and the steady devaluation of the dollar, my question to the experienced Freepers out there is this:

Let's say you're 25, are debt free, make no car payments, earn O-2 pay and are unmarried. You don't have any retirement accounts but are apprehensive of starting an IRA or contributing to a Thrift Savings Plan because of general mistrust of the government and banks as well as the global economic system. You think metals are worthwhile, and buy small amounts of silver on an irregular basis. Other than that, all your savings goes into a savings account.

I understand your mistrust of “the government and banks as well as the global economic system” but I’m with Innovative and few others here with respect to contributing to a tax deferred defined contribution plan, in your case a TSP which is similar to a 401k. Diversify your asset allocations and contribute at least up to the % of the match you are eligible to receive. And if you leave the military and take a job in the private sector offering a good 401k plan, you can transfer all your funds in your TSP into that 401k or into, I believe an IRA. You can still buy “metals” and real estate (although be very careful in these), etc.

Investing with pre-tax dollars today lowers your taxable income and so the amount of federal and in most states, state income tax you pay today and throughout your working years when you are in a higher tax bracket and you only pay tax on the withdrawals during your retirement years when you are probably going to be in a much lower tax bracket. And of course if you retire to a state with no state income taxes, you win again because your withdrawals will not be subject to state income tax.

And if you are eligible to receive a matching contribution, you are somewhat foolish not to take full advantage of that especially if you are young, single and debt free.

While some people do well investing on their own with post tax dollars in individual stocks, metals, futures, short term high risk investments, etc. it is not for the faint of heart and you have to be willing to lose your shirt. Taking advantage of a long term defined contribution pre-tax plan with a wide range of investment options and with employer matching contributions is rarely a mistake. Don’t sweat the ups and downs of the market however because you are investing over the long haul, not the short term.

Put every pay raise you get into savings. TSP is an excellent plan. Time is your best ally. Compounding is very powerful over time. Look at the 100-year history of stock prices and it will be obvious that blue hip stocks are a great way to amass wealth.

Yes, what he said.

When I was young, I didn’t participate in company offered stock options, after all I was going to live forever. When I was young I didn’t contribute to my 401K, because, after all I was going to live forever.

Now that I’m old ... what the hell was I thinking!!

When I met my 2nd Wife, she was in massive debt.
So, being the Husband that I am, I decided to not do any 401K or any retirement stuff until we got above water.
As soon as we did, she dumped me.
Thankfully, if I HAD done the 401K thing, she would have taken half of it in the divorce.

Now, I'm on my third Wife. And we're going to stay married (She's had quite a few ex's, too, and we used to date back when we were in junior HS).
I think I'll start the retirement savings thingy after the ObamaBubbleCrash happens.
Everything's cyclical.

Take out a 15 year mortgage on a home and pay an extra payment every year. With proper budgeting and planning, a borrower can reduce the term of a 15 year mortgage and pay off debt early. One extra monthly payment per year on a 15 year mortgage reduces the term by 2 years. Two extra monthly payments per year reduces the term by another full year. Early mortgage payoff can add up to significant interest savings over the life of the mortgage and a quicker route to added home equity.

Read more: http://www.ehow.com/how_6464508_pay-year-mortgage-off-early.html#ixzz2s4yafG3y

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