Military Millionaire – Seven Crucial Steps

military millionaire

It is possible to retire a military millionaire?

Definitely.

I did it well before retirement.

That’s with making plenty of mistakes along the way.

No trust fund, no help, wife didn’t work.

How can the average military member go from being in debt to military millionaire?

We all see websites, books, and courses from people who were deep in debt and somehow quickly made millions.

ALL THAT STUFF IS SHADY!

These gurus get rich off people looking for shortcuts.  Most that try the guru route fail miserably.

It often involves going into lots of debt or paying a lot upfront for a product, course, or coaching.

These products do a good job of making money for who’s selling them.

They do a poor job of making you anything!

military millionaire

It also requires no common sense

Read moreMilitary Millionaire – Seven Crucial Steps

5 Best Places to Save Your Down Payment (Video)

Where should you save your down payment for a house?

There are tons of articles and blogs trying to answer this question.  I’m not happy with any of them.

I’ll try to answer this my way.

The Rich on Money way.

There are two main factors that will influence where you should invest your downpayment for a house.

The first is how certain you are in what timeframe you will need that money.  Are you for sure using it within the next year?  Not much of a reason to put it at risk.

Are you unsure if you will purchase something in the next several years, but want the option?

Maybe you should consider putting some of that money at risk instead of just letting it sit there not working for you.

The next factor is your risk tolerance.

Some people understand that by putting their down payment in the stock market or a mutual fund, they run the risk of either having it grow quickly, or the opposite, losing half or more of its value quickly.

Could you live with that tradeoff?

If not, go with the less risky options, even if you are not sure when you will purchase a house.

Also, there’s what I ended up doing in my life.

I’ll explain which one of these methods I ended up using for my money.

It’s one that could have backfired on me big-time, but luckily didn’t.

Let’s look at the least risky options first.

TREASURY BILLS

Read more5 Best Places to Save Your Down Payment (Video)

The 10 Cheapest Index Funds to Supercharge your Portfolio

index fund fees

Where will we find the cheapest index funds?

UPDATE 2:  I’m updating this article to reflect new information coming from Fidelity Investments making significant reductions to the costs of their index funds on August 1, 2018 and changes to Vanguard’s fee structure on December 1, 2018.

Index Funds

Let’s have some index fund fun today.

Many in the Financial Independence Retire Early (FIRE) community  recommend VTSAX (Vanguard’s Total Stock Market Index) as the investment of choice.

Why is that?

It probably has something to do with the blog www.jlcollinsnh.com or the book The Simple Path to Wealth.

If you are in the Choose FI world, then you’ve heard of the Godfather of FI, Jim Collins.

You may know he is a huge fan of Vanguard as the mutual fund company of choice.

Why? 

Does it have the cheapest index fund fees?

Does it have the lowest investment minimums?

It turns out…

It does not.

Then why does he recommend it?

I’ll get to that…

One thing I did the first time I read The Simple Path to Wealth (I ended up reading it about 15 times as his editor on the book) was check all my current investments to find out if I was paying too much in fees.

I’ve always followed the simple advice of Warren Buffett.

Invest in index funds.

I don’t believe investors can or should try to beat the market.

Read moreThe 10 Cheapest Index Funds to Supercharge your Portfolio

Why Timing the Market is a Bad Idea

Here are the headlines that I saw when I googled “stock market” a few years ago during a downturn:

“Is a global recession led by a US Stock Market crash in the offing?”

“Dow slides as US stock market suffers worst week in two years”

“Chart analysts see bigger market pullback if interest rates continue to shoot higher”

These headlines are going to affect everyone differently.  Let me share with you how it affects me.  Normally, I would pay no attention to it.  But now:

I laugh at it.

It’s useless information.

Let me give you a little background on me.

I worked for Fidelity Investments as a stock broker while I was in college before I joined the military.  I’m an avid finance nerd and real estate investor.

I’ve studied the markets long enough to know that index funds are the smartest way to invest your money.  Trying to beat the market is pointless.

I also know that a lot of what you see in the financial media space is useless information.  They try to predict where the market is going.  When they get it wrong, they try to explain logically why they got it wrong, which ends up being the perfect definition of hindsight bias.

Hindsight bias, also known as the knew-it-all-along effect or creeping determinism, is the inclination, after an event has occurred, to see the event as having been predictable, despite there having been little or no objective basis for predicting it.

Financial magazines, newsletters, cable programs, videos, it’s all meant to capitalize on either fear or greed.  A few weeks ago, it was greed.  The markets were kicking ass.

Read moreWhy Timing the Market is a Bad Idea

What should I teach my kids about money?

I love all things money.  My kids often see me reading finance books and browsing real estate blogs.  They hear me talking about money with my wife.  They watch us negotiate deals to buy houses with cash, and they overhear our discussions on retiring early.

I explain what I’m doing with money in simple terms to my kids, but I can’t be sure it’s sinking in.  They are 10 and 6.  It is my job to prepare them to navigate money and life.  I wonder how I’m doing.

Read moreWhat should I teach my kids about money?

How I Achieved a PERFECT Credit Score!

How does one get a perfect credit score?  I’m in the military. People around the office ask me for for financial advice. They know I’m a “money guy” and word gets around that I like talking investing and real estate.

I warn people they won’t like my advice. They usually don’t.

This guy didn’t.

Recently a co-worker told me he’s got $20,000 burning a hole in his pocket, and what I think about investing in the British Pound. With the Brexit, it seems like a sure thing!

I told him this kind of speculation in currency isn’t for everyone. Even those who devote their lives to studying this are wrong more often then right. I warned him this would be a fun way to lose money quickly on something he doesn’t understand. It seemed like he took that to heart.

Guy: “Ok, I got a better idea! What about gold!?!?!?”

Read moreHow I Achieved a PERFECT Credit Score!

You Are Not Awesome at Picking Stocks!

Think you are good at picking stocks?

To illustrate how un-awesome you are, let me first share how awesome I am.

When I was just getting started out investing in 2001, I put all the money I had, $4,000, into an index fund. I called my bank and said put it in the S&P 500 index. Warren Buffett taught me well.

The savvy salesmen on the other end of the phone who was clearly more experienced than Warren told me I was crazy to invest in that. I could make money twice as fast if I invested in their aggressive growth fund.

NOW I’M AWESOME!!!!!!

Read moreYou Are Not Awesome at Picking Stocks!

You did WHAT with your IRA?!?

How and Why I bought rental properties in my IRA

Yes, I may have done something stupid.

I certainly did something unique.

I sold all the investments in my IRA and bought rental properties! (My Wife’s too!)

The rental properties are held in the Roth IRA as investments, and the rental income accumulates as cash inside the IRA.

And I’ll show you how it made me FILTHY RICH!!!

I did it, and you can too!!!!!

filthy-rich

Read moreYou did WHAT with your IRA?!?

What Beer Teaches Us About Money

I’m going to reference two awesome books in this post. They are must-have’s if you want to know money.   They are books by finance blogger Jim Collins (http://www.jlcollinsnh.com) and a trader turned probability expert and essayist, Nassim Taleb.

Why would I talk about both of these books in the same post.

Simple.

Reading both gives you almost everything you need to understand money. Damn close anyway.

Beer and Foam

Jim Collins book The Simple Path to Wealth has a section I love where he compares the stock market to a glass of beer. These glasses contain different amounts of beer and foam.

If you use a little skill to pour the beer, you can have a glass full of mostly beer with very little foam on top.

Pour the beer too quickly, you’ll have mostly foam and very little beer.

What if somebody else pours your beer into a mug that you can’t see through and then hands it to you. You have no way of knowing how much is beer and how much is foam.

The same problem exists with the stock market.

Read moreWhat Beer Teaches Us About Money