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How to Start Investing as a Newly Commissioned Military Officer

Investment TSP

You've just put on those brand new butter bars and someone is actually paying you some real money.  You work hard for that money and now you want to make it work for you.

Great, you’ve made the decision to invest. This is a choice only some adults only make when they’re twice your age. You might think your youth is a drawback. It can actually be quite the opposite. If you invest now in your early 20s compared to your mid-30s or early 40s, your money has longer to become valuable.

Of course, investments can be complicated dealings. Here’s what you should know before diving in head first.

Have an Understanding of How Investing Works

It’s your money you’re going to invest, so you should know where it’s going, how it’s used, and how it may increase over time. 

If you’re pursuing this on your own, it’s time to learn. Yes, the world of investments may be complicated, but take the time to absorb everything and ensure this is something you want to get involved with for a while. The greatest principal to learn at this stage is the value of compound earnings/interest. Compound earnings are the earnings that you earn on your prior earnings. One crucial component of compound earnings is that the more time your investments have, the greater the compounding effect can be. 

So, the younger you are when you start investing, the better your chances that your investments will grow to a larger amount. 

Set Aside Some of Your Military Pay for Investments

This comes as no surprise, but you need to have the cash handy to put towards investments. It doesn’t always have to be a huge sum, but still, it shouldn’t set you back financially to invest. Pay yourself first, by directing funds towards the Thrift Savings Plan (TSP).  If you wait to invest until after you've paid your bills, the money will be gone.  Try to invest, in the TSP or other investment accounts, 10% or more of your income.  You should still be able to pay for your expenses, like rent, food, school supplies, student loans, and the like after making your investments.

Don’t Expect Results Overnight

If you’re investing because you think it’s some sort of way to make millions overnight, you’re going to be sorely disappointed. Yes, some people do invest in a new company and eventually make a lot because that company takes off. That said, this is not an overnight process. It can sometimes take a decade or longer before you see a real payoff on your investments. You’re going to have to be patient.  

Be Ready for Ups and Downs

Markets go up and markets go down.  But over long periods of time, which you have sense you're starting early, they almost always go up.  But before you start to invest, make sure you have the discipline to stick to the plan.  I'm thinking you probably do as you're a military officer, but we all have limits.  Figure out what yours is.

When the markets do go down, instead of being deterred from investing again, stick to the plan. Think about it.  Everything just went "on sale".

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. The information in this material is not intended as investment, tax, or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.


Disclaimer
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by C.L. Sheldon & Company, LLC ), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from C.L. Sheldon & Company, LLC . To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. C.L. Sheldon & Company, LLC is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the C.L. Sheldon & Company, LLC ’s current written disclosure statement discussing our advisory services and fees is available for review upon request. DISCLAIMER OF TAX ADVICE: Any discussion contained herein cannot be considered to be tax advice. Actual tax advice would require a detailed and careful analysis of the facts and applicable law, which we expect would be time consuming and costly. We have not made and have not been asked to make that type of analysis in connection with any advice given in this blog post. As a result, we are required to advise you that any Federal tax advice rendered in this blog is not intended or written to be used and cannot be used for the purpose of avoiding penalties that may be imposed by the IRS. In the event you would like us to perform the type of analysis that is necessary for us to provide an opinion, that does not require the above disclaimer, as always, please feel free to contact us.