WHAT ARE THE BEST AND PROFITABLE INVESTMENTS FOR MILITARY FAMILIES?. The purpose of this article,is to highlight; what are the best and PROFITABLE INVESTMENTS FOR MILITARY FAMILIES. Like Federal thrift plan, Individual retirement account (IRAs), 529 college savings plans, savings deposit program and more.
Military service doesn’t give much free time that can enable a member to research and select the best investments. But there are many savings and investment opportunities that can help for the future which does not require a lot of time or stress. Five of the best investments opportunities are highlighted below for a military members to choose.
- Service members have access to many savings and investment opportunities which are not available to civilians
- The Federal Thrift Savings Plan (TSP) similar to a 401(k) plan and give automatic payroll deductions and matching contributions
- Traditional and Roth IRAs feature a wide range of investment choices and can be a better way to support a TSP
- Savings Deposit Program, 529 college savings plans and real estate are other investments.
PROFITABLE INVESTMENTS FOR MILITARY FAMILIES
FEDERAL THRIFT SAVINGS PLAN
This is a qualified retirement plan which give a low-cost, tax-advantaged way for federal employees and service members to invest. One can choose his/her own mix of investments,from a short-term U.S. Treasury bond to index funds to a life cycle fund, the last will rebalances ones assets as he/she approaches retirement.
Choice can be made between two tax treatments for TSP contributions
- Traditional TSP: This pre-tax program can give somebody a tax break in the year when the contribution is made and when funds are withdrawn during retirements.
- Roth TSP: No up-from tax benefit from this after-tax plan, but qualified withdrawals are tax-free in retirements.
Check out TSP.gov’s contribution comparison calculator for the best option.
For 2021, up to $19,500 can be contributed to a TSP ( Increasing to $20,500 in 2022. The figure can increase to $26,000 in 2021 if one is at 50 or older ( rising to $27,000 in 2022).
Those that are part of the Federal Employee Retirement System (FERS) or the Blended Retirement System (BRS) can earn up to 5% more in matching contributions from the military.
Dollar-for-dollar match can be realized on the first 3% paycheck that is contributed to the TSP, with 50 cents on the dollar for the next 2%. More savings, greater the match, so it is better to increase contributions.
Similar to 401 (k), automatic deposits that come from ones paycheck can be set before the persons first check.
INDIVIDUAL RETIREMENT ACCOUNT (IRAs)
Although, one can max out contributions to the TSP, savings can also be made in an individual retirement account (IRAs). This can be a great support to TSP and help to ensure a better retirement.
Similar to the TSP, IRAs are available in traditional (pre-tax) or Roth (after-tax) forms.
Generally, IRAs is more flexible than TSPs due to a lot of investment opportunities.
Although it has a low contribution limit. For 2021 and 2022, one can contribute up to $6000 to IRAs ($7,000 if one is about 50 or older).
529 COLLEGE SAVINGS PLANS
Parents with children and hoping for their future education expenses, a 529 plan can be a tax-advantaged way to save. According to the tax laws passed in 2017 and 2019, 529 plan to pay for K-12 expenses can be used- not only for college but other post-secondary education.
At the federal level, tax deduction are not made on contributions, more than 30 states give a full or partial tax subtraction or credit. For qualified education expenses, a 529 plan is tax free and withdrawals are also tax free.
Any amount can be contributed to a 529, but any amount over $15,000 per individual can trigger federal gift taxes.
SAVINGS DEPOSIT PROGRAM
U.S. Department of Defense’s Savings Deposit Program (SDP) offers deployed Military personnel serving in assigned combat zones a guaranteed 10% annual return on deposited amount of up to $10,000. Qualified person must be receiving Hostile Fire pay and be deployed for either 30 consecutive days or at least one day per month for three consecutive months. The qualified person will continue to earn 10% interest for 90 days after being redeployed home, unless the person requested to withdraw his/her money sooner.
An extra $1000 can also be of help; it should be noted that income from the SDP is reported on a 1099-INT form in the year when funds are withdrawn, this means that taxes can be owe on the earnings.
This can be a better way to develop and achieve higher returns. It involves more risk and effort than lower-risk investments. But, real estate investments offer many advantages, which include tax benefits and ongoing passive income. Buying a house and converting it into a rental property is common way to invest in real estate.
Another Investment opportunity is Real estate Investment trust (REITs). This is a company that owns, operate or finances income-producing properties. Shares of publicly traded REITs are bought by investors using a taxable brokerage account or an IRA. According to the law, REITs must pay out 90% of their profits each year in the form of dividends, this can result in high dividend yields for investors.
INVESTING HELP FROM THE SECURITIES AND EXCHANGE COMMISSION (SEC)
This encourages service members to ask questions on investment or seek information on how to check the license or registration of an individual or a firm. In order to get the information, call the SEC’s toll-free investor assistance line at 1-800-732-0330 (dial 1-202-551-6551 for outsiders or email Help @ SEC.gov.
They are involved in the Department of Defense’s Financial Readiness Network and always conducts investor education briefings at military bases. Interested person should email outreach @ SEC.gov.
THE BOTTOM LINE
Savings Bonds are paying 7.12% through November 2022) and Servicemembers’ Group Life Insurance should be considered.
Service members can have access to programs that can save money. For instance, the VA Home loan program offers loans with no down payment, low interest rates, limited closing costs and no need for Private Mortgage Insurance (PMI).
In addition, the Post-9/11 GI Bill takes care of in-state teaching and fees at public colleges for up to 36 months and spend up to $26,042.18 per year for Private colleges and foreign schools. Students can get money for housing, books, supplies and moving costs. Benefits can be transferred to a spouse or child by longtime service members.
Service Members what can they invest in?
Both military families and civilians, including few federal government employees and service members have access to the same investments.
Is it possible for service members to invest in stock?
Service Members have the right to open taxable brokerage accounts to buy and sell stocks, exchange-traded funds (ETFs) etc.
To qualify for a Military pension how many years do I need to serve?
Service of at least 20 years qualifies one for the lifetime monthly annuity. Benefit is based on the number of years served and earnings. And it I determined by the time one entered the military.
PROFITABLE INVESTMENTS FOR MILITARY FAMILIES
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