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| chrsrichard |
 Posted: Tue Sep 04, 2007 2:37 pm Post subject: Going to Iraq. Looking to invest while I'm gone. |
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| I'm deploying to Iraq in a month or so and I'm looking to invest some money while I'm gone for 15 months. Anyone have any ideas as to how I should invest; mutual funds, stocks, etc...? I pretty new to the investing business so any kind of advice will help here, thanks. |
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| heos |
| Posted: Tue Sep 04, 2007 4:59 pm Post subject: |
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Investing Sr. Associate
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CD's
As your savings grow and your all-important emergency fund nears that three to six months of living expenses you might need in a crisis, you'll find you can afford to let the bank lock up some of your savings for a period of time. In return you can expect the bank to give you more interest than they pay on your savings or money market account, which is liquid.
At a glance
A certificate of deposit (CD) is an excellent way to save money and earn a higher interest rate than you would with most money market investments. The drawback is that CDs are not liquid; you're tying up your funds for a period of time, and if you cash out early you'll lose interest and possibly principal.
CDs are time-based, fixed-income investments that are most often issued by banks but can be purchased through banks or brokerages. Some banks might require you to come into the bank to open a CD account, others may let you open one online.
Typically, you invest a fixed amount of money for a predetermined amount of time called the term, and you're guaranteed your principal plus a fixed amount of interest, which you receive periodically throughout the term.
When the term expires you can cash out the principal and interest, or roll over the CD for another term. You can opt to withdraw the interest payments as they are received.
CDs can be purchased for terms of almost any duration although the most popular are between three months and five years. Almost always, the longer you allow the bank to use your money, the higher your interest rate. Generally, it's not a good idea to buy a CD with a term of more than five years. The interest rate situation could change dramatically during that time and you could get stuck with a long-term, low-rate CD.
CDs are deposit accounts and are insured by the FDIC up to $100,000 ($250,000 on retirement accounts.
Savings Bonds
U.S. Savings Bonds The Gift that Keeps on Giving
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Safe and Affordable
Like any other U.S. Government security, Savings Bonds are backed by the full faith and credit of the U.S. Government. What makes them so popular for gift-givers and small investors is that they are available in smaller denominations than other government securities. Savings Bonds can be purchased in denominations as small as $25 each, and are also available in denominations of $50, $75, $100, $200, $500, $1,000, $5,000, and $10,000. The government allows each individual to purchase up to $15,000 in Savings Bonds each year.
U.S. Savings Bonds are safe and secure. Bonds can be replaced if lost, stolen, or destroyed, as long as it can be established that the bonds haven't been cashed, or, if cashed, have been paid in error to the wrong person.
A Market-based Investment
Savings Bonds are a market based investment which means that, unlike Treasuries which pay a fixed rate of interest, their interest rates will vary over time. As of May 1997, this rate is computed by taking 85% of the five-year Treasury note rate over the time you own the Savings Bonds. Prior to May 1995, the Savings bond Rate was computed by taking 90% of the five-year Treasury rate. Savings bonds purchased between 1995 and 1997 are computed from short term reference rate. For help in computing the current interest rate of your Savings Bonds, click here for a Savings Bond calculator.
Savings Bonds are a liquid long-term investment. Interest on bonds will continue to accrue for 30 years, but bonds can be cashed anytime after six months.
Tax Advantages
Interest earned on U.S. Savings Bonds is exempt from State and local income tax. You can also defer paying Federal income tax on the interest until you cash your bond or until it stops earning interest in 30 years. Also, Savings Bonds may provide further tax savings when used to finance higher education.
Easy to Buy
You can buy EE Bonds and I Bonds at your local bank, most financial institutions, and even through the Payroll Savings Plan where you work. The Bureau of Public Debt which issues Savings Bonds also offers a program called EasySaver which allows you to buy Savings Bonds with an automatic deduction from your bank account. Whichever option you choose, you will never have to pay any fees or commissions when you purchase Savings Bonds.
How Savings Bonds Work
Most Savings Bonds are bought at a discount, which means that, at the time of purchase, you pay only less than the bond's face value. For example, a $100 Savings Bond will cost you $50. Depending on the series of Savings Bond you own, you either receive your interest now or later.
When Bonds Mature
Original maturity is the maximum amount of time it takes for a Series E/EE Savings Bond to reach its face value. For any Series E/EE Savings Bond purchased between May 1995 and the present, the original term for the bond to reach maturity is 17 years.
However, your bond will continue to earn interest for a specified period even after it reaches original maturity. After its original maturity, a bond automatically enters one or more extension periods (usually ten years long). During extensions, bonds issued prior to May 1995 earn interest based on a guaranteed yield or a market-based yield. The applicable yield is the one in effect at the time the bond enters the extension. Bonds issued after April 1995 have no guaranteed minimum yield. They will earn interest in accordance with the terms and conditions in effect at the time they enter the extension.
At the end of their extension period(s), bonds are said to have reached final maturity. At this point, they stop earning interest and can either be redeemed or exchanged for Series HH current income bonds.
Series E/EE Bonds and H/HH Bonds
Series E/EE bonds and savings notes are accrual securities. As you hold these bonds, interest is periodically added to the amount you originally paid to establish their current redemption value. The longer you hold your bond, up to 30 years, the more valuable it becomes. When you cash your bond, you receive the return on your original investment plus the interest you earned while you held the bond.
Series H and HH bonds are current-income securities. These bonds pay you interest every six months and, when you cash them, you receive your original investment back.
Series I Bonds
Series I Bonds are structured differently than the more common Series E/EE and H/HH Bonds. They're sold at face value and grow with inflation-indexed earnings for up to 30 years. You can invest as little as $50 or as much as $30,000 per year. I Bonds will generally increase in value every month and interest on them is compounded semi-annually. They are liquid and can be turned into cash at any time after six months.
The I Bonds earnings rate is a combination of two separate rates: a fixed rate of return and a semiannual inflation rate. Each May and November, the Treasury announces a fixed rate of return that applies to all I Bonds issued during the six-month period beginning with the effective date of the announcement, May 1 or November 1. The fixed rate for any given I Bond remains the same for the life of the bond.
Also, every May and November, the Treasury announces a semiannual inflation rate based on changes in the Consumer Price Index. The semiannual inflation rate is then combined with the fixed rate of an I Bond to determine the bond's earnings for the next six months. The current earnings rate for I Bonds is 6.98%, which is 3.4% over inflation. |
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| tekbubble |
| Posted: Tue Sep 04, 2007 5:34 pm Post subject: |
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Investing Manager
Joined: 04 May 2006
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| Im Not Warren Buffett |
| Posted: Wed Sep 05, 2007 3:36 am Post subject: |
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CFO
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| tekbubble wrote: | | Let it all ride on BRLC. |
BRLC is a crapshoot. You don't need more risk in your life.
If you want to be able to withdraw this money when you return in a little over a year, it would be best to keep it in short-term, risk-free instruments like CDs, a money market, Treasuries, and the like.
If you want to set up a long-term investment plan starting now, then I would start some combination of ETFs depending on your age. |
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| prs1065 |
| Posted: Wed Sep 05, 2007 4:31 am Post subject: |
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Investing Manager
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| i agree with the low risk |
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| tekbubble |
| Posted: Sun Sep 09, 2007 12:31 pm Post subject: |
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Investing Manager
Joined: 04 May 2006
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you'll be saving up a bunch of tax free cash
you can afford to be risky. Let it ride on 2-4 high growth stock you feel real good about. |
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| Im Not Warren Buffett |
| Posted: Sun Sep 09, 2007 2:28 pm Post subject: |
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CFO
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| tekbubble wrote: | | you can afford to be risky. Let it ride on 2-4 high growth stock you feel real good about. |
Why be risky when you don't have to be? It has statistically been proven that growth stocks underperform. If the guy is going to be fighting on the streets in Fallujah or whatnot, the last thing he needs on his mind is whether he will come back to find his savings are gone in some tech-stock meltdown. |
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| MEDIC1FF |
| Posted: Mon Sep 10, 2007 4:38 am Post subject: |
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Investing Sr. Associate
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chrsrichard, I have a few questions. What branch are you in and are you active, guard or reserve? If you have not already signed up, you need to sign up for TSP. The TSP offers the same type of savings and tax benefits that many private corporations offer their employees under 401(k) plans. You can elect to contribute any percentage (1 to 100) of your basic pay. But, your annual contibution cannot exceed the Internal Revenue Code limit, which is $15,000 for 2007. You can also contribute from one to 100 percent of any incentive pay or special pay (hazardous duty and imminent fire). If you are in the Army, The secretary has authorized matching contibutions, dollar for dollar up to 3% then 50% on the next 2%. Remember that while you are there all of your base pay will be tax - deferred, and monies paid into the TSP are also tax - deferred. One more program that I did while i was in Iraq is the "Special Savings Accounts for Combat Zones", while in Iraq you will be able to deposit up to $10,000 into the SDP. Interest accrues at 10% and compounds quarterly. When you get in country you will have to go see your servicing finance battalion, these are the people you will need to see anyway if you ant to get money. As long os you are in county in support of OIF/OEF you are eligible. Between the two you will be able to invest $25,000.
Last edited by MEDIC1FF on Mon Sep 17, 2007 3:23 am; edited 1 time in total |
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| MEDIC1FF |
| Posted: Mon Sep 10, 2007 4:58 am Post subject: |
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Investing Sr. Associate
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One more thing, please please please make sure that your DD93 is updated and correct and that you you have a will and limited Power of attorney. Also, if you are a guard or reserve member you you are protected under the Soldiers' and Sailors' Civil Relief Act (if you are active duty you also are protected, however guard and reserve members get some additional protections). make sure that you understand what protections you get with this provision.
more info if you want it, just let me know. |
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