Investment suggestions for a new Army guy

[Phantom Warrior]

I just graduated from Army Infantry OSUT yesterday (07 October) and I'm back.  So you'll probably be seeing me around here and on THR again.  

For the first time in my life I actually am making semi-decent money and I don't have to worry about paying for school.  So I have a significant amount of disposable income (for me).  I'm a fairly thrifty person and I want to go to law school after I get out of the Army, so after my initial spate of purchases to celebrate graduation I'm planning to settle down to a fairly strict plan of saving.

Which brings me to me question.  What is a good way to invest my money over the next few years?  I will also be starting up a longer term/retirement fund, but my immediate concern is a way to bank...$10-50K for roughly five years, get a decent return on it, and not have to worry too much about it losing value.  Put another way, I don't have as much risk tolerance w/ this money as I will my retirement fund.

I'd like something that can earn at least 5%, because I can get almost that w/ just a CD or something.  And I'd like something fairly coventional.  No sales programs or real estate or something like that.  I'm open if any of you have brilliant ideas.

I have done some investing w/ Thrivent, the Lutheran financial company (formerly Lutheran Brotherhood), but I haven't been too impressed w/ my returns.  That may be the economy's fault or mine too, I'm not sure.  One of my buddies from basic who is VERY financially savy said he has been getting good returns w/ USAA.  Google their name if you aren't familiar.  Their site isn't very informative, so I'd like to know a little more before I take the leap.

I'd appreciate advice from any of the financially knowledgeable people out there, esp military people.  I don't need much advice on actual saving.  I know the basics; pay yourself first, make a plan, budget, discipline over the long term, blah blah.  And for those about to suggest the Army pay for law school, I know about FLEP already.

Thanks in advance.

[Guest]

My financial advice is basically don't have kids, so that's probably not helpful.

But congrats on graduation!

[The Rabbi]

The easiest is this:
dollar cost average into an index mutual fund.
It sounds simplistic, I know.  It isnt very exciting.  But actively managed mutual funds are a) very expensive and b) fail to beat the averages pretty consistently.  The SEC has a website where they show you the impact of management fees on mutual fund returns.  It isn't pretty.  One percent doesnt sound like a big deal, but it is.
Over any 20 year period the stock market has returned 7-8% on average.  An index fund will mirror that of course.  Some years the market will be up and some years down.  If you dollar cost average, send the same amount every month, you get the benefit of both ups and downs.  This method has been shown to beat just about any other over time.  The key being over time.
If you want to get more aggressive, try an index fund that focuses on mid-cap stocks.  To diversify add an index fund that covers foreign markets.
It takes no time beyond the initial research.  Just discipline and patience.  And coming out of the Green Machine you probably have both.

[Dannyboy]

To add to what Barbara said, don't get married.  Unless you find a sugar mama.
Oh, and the Rabbi gives good advice as well.  Index funds aren't gonna give you the big movie-type return but you won't get hosed either.

[stevelyn]

Don't get married. Don't have kids. Keep debts to a minimum and check out VALIC.

[Phantom Warrior]

We're getting a little far afield here guys (and girls).  All I need right now is advice on how to invest the money I will be earning over the next few years.

[MaterDei]

We're getting a little far afield here guys (and girls).  All I need right now is advice on how to invest the money I will be earning over the next few years.

Spending and investing go hand in hand.  Some of us more mature guys and gals have learned that had we spent more wisely, then how we invested our money would have been less important.  Here are my suggestions.

1.  Buy a good pair of boots.  A good investment for a soldier.
2.  Live on post.
3.  Eat in the chow hall.
4.  Stay out of the Columbus strip joints.  Go to the enlisted man's club if you want entertainment.
5.  Don't use a 'free' financial planner.  They hover around Army bases and make money by selling high yield mutual funds.  Rather, decide on what types of investments you want to make and use USAA or somebody equivalent to purchase them.
6.  Pay yourself first.

Good luck!

[Werewolf]

1. Find a fund company you are comfortable with. There are many. Some are better than others. My personal favorites are 20th Century, Vanguard, Fidelity. I used to be a big fan of Janus but they've gone down hill a lot lately IMO. Stay away from Oppenheimer.
2. Once you find a company then research their growth (not aggressive growth) and balanced funds. Bond funds too but bond funds can do funny things at odd times and I don't recommend them for beginners. Pick one.
3. Open a bank account that you can have an allotment deposited into every month fund it with about $100. Then start an allotment  in the amount you wish to invest every month.
4. Open an investment account with the company you choose in 1 above and put the minimum required amount into your chosen fund (some will allow 0 if you set it up for monthly deposits).
5. Set up your chosen fund to draw on the account you set up in 3 above in the amount of your allotment.

Then just forget about it - literally. Unless there are indications that the market is going to crash or something then you'll hava to get involved but if you're in the field - well...

I know a lot of guys who did this and got out after 20 years and had both their retirement and a million or so dollars. Returns these days are lower so it may only be hundreds of thousands of dollars after 20 years but always remember...

WHEN INVESTING - TIME IS YOUR FRIEND

[Gewehr98]

I don't know if the Army started doing so yet, but the Air Force now offers what they call a Thrift Savings Plan to active-duty members, which is about as close to a 401K as they're gonna get.  Maybe the Army has something similar?

[Phantom Warrior]

The Army (and everyone else working for the federal government) is eligible for TSP.  But I'm really looking for something I can use as a short-term investment, not a retirement fund.  And since I'm not planning to do 20 years active I probably won't do my retirement w/ TSP either.  Good thoughts though.

[grampster]

See if you can find a nearby "Mutual Fund Store".  Owned by Adam Bold.  He's on AM radio on Saturday's and talks about mutual funds and strategy.  He sounds like a guy who makes sense.    In fact I just Googled The Mutual Fund Store.  It popped up.  Check it out.

Oops, just checked out a review of the company and its owner.  Forget what I said above.  Sounds like he's just a slick radio shyster according to the reviewer.

As Roseanne Rosanadana used to say..."Never mind".

[Jamisjockey]

TSP is the only way to go.  Why?  The government matches the first 5 or 6 % (not sure which).  This means its an immediate 100% return on your money.
Its tax deferred, so there are penalties on it when you take it out early.  
Also, a good solid mutual fund.  
Don't forget to sign up for the GI bill if you're sure you're going to college.

Good luck!

[telewinz]

Mutual Funds is excellent advice IF you don't believe there will be a terrorist attack in the U.S. during the next 3-5 years.  If you think it's probable that there will be an attack, invest in precious metals or investment grade stones (or stocks of the same).  At this point in time (uncertainty) and your young age, I would NOT invest in moderate risk stocks, only VERY low risk stocks but no nonsense like Bank Cd's, Treasury Notes or Savings Bonds.  NO FOREIGN INVESTMENTS!