By Chris Mandia
So you’ve just disembarked off an international flight from Afghanistan. As a U.S. Service Member in a combat zone such as Afghanistan or Iraq, you’ve probably amassed quite the nest egg.
With the Middle East being a tax-free zone, along with danger pay and a possible re-enlistment bonus (also non-taxable), odds are your checkbook is in the black. Perhaps so much so that you’d like to do something with that extra pay for deployment.
You could put some cash down for a new Honda Civic or Sony wide-screen television — but why not use your money more wisely? It would behoove a service member (or any individual for that matter) concerned with their future to entertain the idea of long-term investments.
Although the stock market and Wall Street seem rather hostile, that does not preclude it from being beneficial towards your future. Additionally, there are a number of tax-free investments that service members can explore.
There are essentially four major investment opportunities out there, with a 401(k) being the most common form of investment. Although generally composed of small initial investments throughout time, a 401(k) can contribute significantly towards your retirement.
Continuing down the list, there’s the Traditional IRA (Individual Retirement Account) or Roth IRA. Monies invested in an IRA grow tax-free until the owner turns 59.5 years of age. At this time, the owner is allowed to withdraw funds in order to finance their retirement, but must pay taxes upon withdrawing the money.
A Roth IRA, on the other hand, does incur taxes as service members make contributions into the retirement account. While this may seem like a disadvantage, Roth IRAs are tax-free for retirees upon withdrawal.
Brokerage accounts are another way to invest deployment pay for those wondering what to do with extra money. In essence, an individual pays professionals to buy or sell stocks, bonds and other investment options. These stock traders are often found online and provide a wide range of services including money management.
Some high-profile brokerage firms are Scottrade, Ameritrade and Merrill Lynch.
In regard to the types of service members can invest in, there are several options like preferred stocks, common stocks and mutual funds. The trick is to do your research, create a plan of attack and invest wisely. As a veteran or current member of the U.S. Military, you have a unique ability to utilize your warrior mentality when braving the current stock market.
These two precious metals have seen their value increase tremendously in the last ten years. For those interested in short or long-term investment, gold and silver have traditionally been conservative stakes. As insurance against inflation, currency debasement and global uncertainty, gold can be purchased in a variety ways.
One long-standing method comes in the form of gold bullion — the tangible metal itself. Physical gold varies in form from coins, jewelry and even bars. Another popular approach to gold investment comes in the way of gold exchange-traded funds or ETFs. By acquiring shares in these ETFs, an service members can forgo the responsibly of possessing physical gold.
Ultimately, when choosing to invest in gold or silver, be prepared for a roller coaster ride — the profits can be big, but hinge entirely on the world market.
If the idea of stocks, bonds, gold and silver seem too risky for you, there is still another option. A certificate of deposit (CD) is a low-risk fiscal product offered to individuals in the United States by banks, credit unions and thrift institutions.
Similar to a savings account, CDs are insured by the Federal Deposit Insurance Corporations (FDIC) and the National Credit Union Administration (NCUA). Held until maturity, a CD comes with a relatively high interest rate. Offering fixed interest rates and specific terms — varying from several months to several years — a certificate of deposit is an excellent approach to safe investing.
For service members who have extra funds sitting around in a checking or savings account, it’s a smart idea to look into investment options. While a sleek, new sports car or plasma-screen television may satisfy your present needs, they won’t contribute to happiness in the future. Smart investing will surely prove more beneficial.