Win the Money WarJames D. Redwine

E-book: Amazon or Barnes & Noble

Face Book: Win the Money War Email: jgredwine@sbcglobal.net

Purpose

1. Economic threats

2. Financial tools

3. Investing plan

4. Considerations:1. Social Security

2. Survivors’ Benefit Plan (SBP)

3. Home buying

Agenda

1. Situation

2. Mission

3. Execution

4. Service Support

5. Command & Signal

I. Situation

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

II. Mission

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

III. Execution

Tools

• Tax advantaged accounts– TSP (Roth for most; Traditional if high taxes)– Roth IRA

• Passively managed funds– Index funds– Index ETF funds

• Complementary holdings

Investing Guidelines

1. Avoid bond funds

2. Minimize cash holdings

3. LSI ASAP

4. Buy & hold

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)

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)

IV. Service Support

Social Security

1. Soldiers pay FICA taxes, thus we get SS

2. Soldier’s benefits (70% - 124%)

3. Survivor’s benefits (71.5% - 100%)

4. Spouse’s benefits (32.5% - 50%)

5. Tactic: “62 / 70 Split”

62 / 70 Split

Ages Soldier $2000 NRA

Spouse $1600 NRA

Couple’s TOTAL

62 $1120 $1120

67 $800 $1120 $1920

70 $2480 $1120 $3600

Soldier Deceased

$2480 $2480

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?

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

Monthly Cash Flow$300k House

vs. Quarters

4% rate; 0 money down; 30-yr term; VA

On-Post

CPT’s BAH

Principal & Int. *1463 1347

Taxes 350 0

Insurance 125 0

Maint. 300 0

Utilities 350 0

Travel 54 18

SUM** 2642 1368* Includes VA funding fee (2.15%).

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 1686 11461st year’s interest 8229 10,3093 years of interest 22,120 28,802Full term interest 63,553 172,487

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 327,818 327,818

Total Gain 27,818 27,818

– 7.5% costs 5318 5318

– 3 yrs maint. 3682 3682

– 3yrs interest 25,802 32,484

V. Command & Signal

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 survivor’s cash flow

7. Live on post; or 15 yr term & 20% down

Win the Money WarJames D. Redwine

E-book: Amazon or Barnes & Noble

Face Book: Win the Money War Email: jgredwine@sbcglobal.net