Are you in the military? Maybe you’re just married to someone who’s in the military? Either way, you know how difficult it can be to move around so often and have the family budget disrupted by that. If you’re wondering what investments are best for military families, here are five of them, whether it’s making extra money while deployed or just saving up some cash before your next move.
Investment 1: Buy a House
Owning a home is a key part of the American dream, and it’s especially important for military families. Not only is it a physical investment that will shelter your family, but it can also be a great financial investment. The Federal government offers a number of programs to help military families buy homes, and there are many real estate professionals who specialize in working with heroes.
Whether you want to purchase a starter home or your dream house, real estate professionals can walk you through all of your options. And there are many programs available to make homeownership easier on military families. The GI Bill provides access to more than one million VA-approved mortgages and reduces interest rates on loans. The Veterans Affairs Department also offers down payment assistance, closing cost assistance and incentives from local governments like tax credits.
Investment 2: Start an Emergency Fund
anything else, you need to have an emergency fund to cover unexpected expenses. A good rule of thumb is to have three to six months of living expenses saved. Once you have that, you can start thinking about investing your money. For military families, one of the best investments you can make is in your education. The Federal government offers a number of programs to help service members and their families pay for college. Taking advantage of these programs can help you get ahead financially.
Another great investment for military families is a home. While it may seem like a lot of money upfront, owning a home can save you money in the long run. Not only will you build equity, but you’ll also have a place to call your own. One other benefit of home ownership is that it’s tax deductible. By investing in your education and buying a house, you’re setting yourself up for financial independence while simultaneously serving our country. So whether you choose to stay or go when your service ends, you’ll be well prepared for what lies ahead.
Investment 3: Maximize Your Retirement Savings
One of the best investments you can make is to max out your retirement savings. Whether you’re in the Army, Navy, Marines, or Air Force, you can take advantage of the Thrift Savings Plan (TSP). The TSP offers great tax benefits and is one of the best ways to save for retirement. If you’re not already contributing the maximum amount allowed, start today!
When you contribute to your TSP, you receive matching contributions from your employer. For example, if you’re in pay-grade E-6 and contribute 5% of your basic pay to your TSP, you’ll receive a 5% match from your employer—so 10% of every dollar you contribute goes toward growing your retirement savings! As an added bonus, if you’re under 50 years old and serve at least five years in uniform, any additional money contributed to your account will be matched 100%. That’s free money just waiting to help make sure that today’s investment is tomorrow’s retirement nest egg. The more time you give it to grow, the more it will help fund a comfortable retirement.
Investment 4. Build up an emergency savings fund
It’s important to have an emergency savings fund to cover unexpected expenses, like a car repair or a medical bill. For military families, this is especially important because you may have to move unexpectedly or deploy. Building up an emergency fund can help you feel more financially secure and prepared for whatever comes your way. Here are some tips for building up your emergency fund:
- Start small and gradually increase the amount you save each month.
- Set up a budget and make saving a priority.
- Automate your savings by setting up a direct deposit from your paycheck into your savings account.
- Keep your savings in a separate account from your checking account so you’re less tempted to spend it.
Start contributing to your IRA or 401(k): You can start saving money in a tax-advantaged retirement account while you’re working, which is known as a pretax contribution. The money will grow in your account without being taxed, and when you withdraw it after age 59 1/2 it won’t be taxed again either. This means you’ll enjoy bigger paychecks today while setting yourself up to have an even higher income in retirement—it’s what financial pros call getting ahead on taxes.
Investment 5. Build Wealth in the Stock Market
Many military families are hesitant to invest in the stock market because they believe it is too risky. However, with a little research and the help of a financial advisor, investing in the stock market can be a great way to build wealth. For example, you can start by investing in a mutual fund that specializes in companies that support the military. This will give you peace of mind knowing that your money is going towards companies that have your best interests at heart.
Investing in stocks is also a great way to diversify your portfolio, since each stock represents a company. When you invest in a military-themed mutual fund, your risk is spread out among many different stocks, so if one of them falters or fails you will be protected by others that are performing well. Additionally, as companies grow and flourish they tend to offer more jobs, which is beneficial for veterans looking to find gainful employment after military service. Finally, investing in stocks allows you to take advantage of compound interest over time. The longer you have money invested in stocks, bonds or mutual funds, the faster it can grow into considerable wealth.