If you’re in the military, getting started on investing won’t be too difficult. Since you have access to the Thrift Savings Plan, you can invest in some of the lowest-cost options available. However, you need to learn how to make the most of this blessing – and we’ve got you covered. Here are a couple of tips to make decisions that ensure the growth of your account.
1. Take Advantage of the TSP
What’s better than investing, you ask? Getting free money, of course! The state will match your TSP contributions up to 5% of your pay if you’re part of the Blended Retirement System. For free money, you can do that much at least. Now’s the time to make contributions to your TSP a top priority!
2. Benefit from Automated Investment
If you find yourself second-guessing or worrying about stock market conditions, the TSP has you covered for that, too. It provides a very useful function in which your paycheck is automatically invested every month.
The dollar-cost average concept helps buy shares when prices are low and to maximize growth when prices rise. Basically, this way, you’ll be able to take the emotions out of investing.
3. Invest According to Your Age
It’s very common for service members to invest in government bonds, thinking that they’ll be safest. While the volatility is subtracted from government bonds, your investment most likely won’t swell to meet the inflation rate as much as you’d prefer.
On the other hand, while the stock market is pretty volatile, it grants the opportunity to reap larger rewards. Keeping both scenarios in mind, we suggest that younger service members ride the market’s ups and downs in search of large rewards. However, as you approach your retirement age, it’s best to minimize the risk and opt for safer investment options.
4. Take Advantage of TSP Tax Benefits
You can make TSP contributions in two ways – traditional or Roth. While your income is less taxable with the traditional TSP, you’ll have to pay taxes when you withdraw your retirement income. With Roth, however, you get the option to withdraw all your income tax-free. Wouldn’t it be great to have this little untaxable pot of money waiting for you at the end of your career?
5. Save Whatever You Can Spare
Make it your mission to save whatever extra money you might land upon, be it a tax refund, stimulus check, or a gift. Try putting some of it towards a Roth IRA account, which is great for retirement savings. All you’ll have to do is head to your nearest bank, brokerage firm, or mutual funds company. The best part is, you can withdraw money from your Roth IRA without any penalties or taxes at any time!
Bottom Line
Everyone needs to plan for a comfortable retired life. Put these tips to good use so that when it’s finally time for you to rest, you don’t have to worry about money ever again!