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Win the Money War James D. Redwine E-book: Amazon or Barnes & Noble Face Book: Win the Money War

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Presentation on theme: "Win the Money War James D. Redwine E-book: Amazon or Barnes & Noble Face Book: Win the Money War"— Presentation transcript:

1 Win the Money War James D. Redwine E-book: Amazon or Barnes & Noble Face Book: Win the Money War

2 Purpose 1.Economic threats 2.Financial tools 3.Investing plan 4.Considerations: 1.Social Security 2.Survivors Benefit Plan (SBP) 3.Home buying

3 Agenda 1.Situation 2.Mission 3.Execution 4.Service Support 5.Command & Signal

4 I. Situation

5 America Must Cut Costs 1.National debt = $16 trillion 2.Soc Sec & Medicare = $48 trillion 3.Perpetual U.S. dollar devaluation 4.Print money; Cut benefits; Raise taxes 5.Riskiest COA = rely on fixed income

6 II. Mission

7 Mission 1.Who: Your family and you 2.What: Invest to win, not to avoid losses 3.Where: Discount brokerage & Gov tools 4.When: Before Gov changes the deal 5.Why: Econ. threats are forcing changes

8 III. Execution

9 Tools Tax advantaged accounts –TSP (Roth for most; Traditional if high taxes) –Roth IRA Passively managed funds –Index funds –Index ETF funds Complementary holdings

10 Investing Guidelines 1.Avoid bond funds 2.Minimize cash holdings 3.LSI ASAP 4.Buy & hold

11 Asset Allocation 1.U.S. equities (Roth TSP) 2.Foreign equities (Roth TSP & Roth IRA) 3.Real estate (Roth IRA) 4.Precious Metals (Roth IRA)

12 Historic Returns 1.10% U.S. Large Caps 2.12% U.S. Small Caps 3.10% EAFE 4.14% Emerging Markets 5.10% Real Estate (REITs) 6. 3% Gold (Precious Metals)

13 IV. Service Support

14 Social Security 1.Soldiers pay FICA taxes, thus we get SS 2.Soldiers benefits (70% - 124%) 3.Survivors benefits (71.5% - 100%) 4.Spouses benefits (32.5% - 50%) 5.Tactic: 62 / 70 Split

15 62 / 70 Split AgesSoldier $2000 NRA Spouse $1600 NRA Couples TOTAL 62 $ $800$1120$ $2480$1120$3600 Soldier Deceased $2480

16 SBP 1.6.5% premium for 55% benefit 2.Tax deferred premium 3.Benefits get COLAs 4.Life long contract vs. 7-figure disaster 5.Health? Genetics? Investments?

17 Buying a House 1.Live on post: good cash flow + easy exit 2.VA Loan Prgm: fast, but charges a fee 3.If buy: 15 year term; 20% down 4.Brief ownership + minor gains = losses

18 Monthly Cash Flow $300k House vs. Quarters 4% rate; 0 money down; 30-yr term; VA On-Post CPTs BAH Principal & Int. * Taxes3500 Insurance1250 Maint.3000 Utilities3500 Travel5418 SUM** * Includes VA funding fee (2.15%).

19 Mortgage Terms & Interest $300k House 15 vs. 30 yr terms 3.25% rate; 20% DP; 15-yr term; Conv 4% rate; 20% DP; 30-yr term; Conv Monthly PI st years interest ,309 3 years of interest 22,12028,802 Full term interest 63,553172,487

20 Brief Ownership is Costly $300k House 3% gain x 3 years 3.25% rate; 20% DP; 15-yr term; Conv 4% rate; 20% DP; 30-yr term; Conv Sale Price 327,818 Total Gain 27,818 – 7.5% costs 5318 – 3 yrs maint – 3yrs interest 25,80232,484

21 V. Command & Signal

22 Summary 1.Economy & Gov threaten you 2.Defenses: Roth TSP + Roth IRA 3.Invest to Win, not to avoid losses 4.Hold equities: U.S., foreign, REIT, gold 5.Social Security: soldier, survivor, spouse 6.SBP: anticipate survivors cash flow 7.Live on post; or 15 yr term & 20% down

23 Win the Money War James D. Redwine E-book: Amazon or Barnes & Noble Face Book: Win the Money War

24 Appreciation or Depreciation $300k House:3% Gain x 3 yrs0 Change x 3 yrs3% Loss x 3 yrs Sale Price 327,818300,000273,802 Gain or Drop 27,818026,198 – 7.5% costs ,50048,698 – 3 yrs maint ,50057,698 – 3yrs interest 25,80253,62079, % Rate; 20% DP; 15-yr Term; Conv


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