Bulls and bears in the military: stocks, bonds and more on a military salary
Sure, your main career is the military. But your second career is military money management, for yourself and your military family.
Ever thought you could manage your own portfolio of stocks and bonds? Sure you can. Even with a busy military lifestyle, you can do it.
Take a deep breath and start with this simple formula approach to military investing:
Mix it up. Divide your money between stocks and bonds. You can use online tools to find the right mix for your age and risk tolerance. The easy way to decide on stock allotment is to subtract your age from 120. If you're 40, put 80% of your long-term savings in stocks and 20% in bonds. For every year you approach military retirement, subtract your age from 120 and adjust the mix.
Try index funds. An index fund doesn't make as sharp moves as a single stock; you virtually own the entire stock or bond market, thus spreading your risk somewhat. ETFs - Exchange Traded Funds - are another interesting choice, whereby you own a mix of stocks in a particular sector or industry. It's nice to spread the risk and spread the wealth.
Invest 10% maximum in any one company's stock. Just like a good military strategy, never put all your eggs into one basket; spread your strength. So never be over-invested in any one stock: no more than 10% of your total portfolio. In fact, you may not want to invest in stocks with more than 10% of your liquid assets. Because even a perfectly good company can fall on hard times - and their stock price will show it fast. Never be over-invested in any one stock, no matter what you think about it's products or services.
Annual fees for a mutual fund: 1% for a large-company stock fund, 1.3% for any other type of stock fund and 0.6% for a U.S. bond fund. A percentage point here and there may not sound like much, but it can add up. A fund manager needs to pick a lot of great stocks to make up for those costs.
Maybe you'd like the support of a financial advisor to manage your military investments. No problem - there are lots of financial advisors who can show you a multitude of investment products to suit your military lifestyle goals.
In addition to stocks and bonds, there are exotic hedge funds and insurance products and more....but make it easy on yourself by keeping it simple. Buy what you understand and can follow. No need to complicate your already complex military life; investing should enhance, not overwhelm your military life.
The key is to know your military lifestyle goals and needs, and make sure the investment opportunities you choose are geared for your military money success.
