PSA - things I should have done....

[JTS11]

...The fact that something on the order of 98% of Whole Life policies never pay out because the owners cash out beforehand is a telling statistic - and what keeps the whole life industry alive. Also, as an industry, the sales are seedy: promising "guaranteed" returns is illegal but fairly common nonetheless, and saying your cash out distributions are "tax free" is a bold faced lie.

You can never have enough life insurance. Amiright...amiright

 

[MGoBrew11]

So if as a dumb LTJG, one opened a mutual fund and Roth IRA through First Command, where would one look to see if/where they’re sucking money away from er, that individual? Asking for a friend.

The money goes straight from checking to 3rd party (well known) brokerage firm...it’s not like FC ever “touches” it.

 

[Hair Warrior]

If you had the funds to buy a rental property for Airbnb/Vrbo, where geographically would you buy?

 

[AllYourBass]

So if as a dumb LTJG, one opened a mutual fund and Roth IRA through First Command, where would one look to see if/where they’re sucking money away from er, that individual? Asking for a friend.

The money goes straight from checking to 3rd party (well known) brokerage firm...it’s not like FC ever “touches” it.

Take a bit to look into the expense ratios of each of the funds you are contributing to. The tricky thing about high expense ratio (i.e., high-fee) funds is that you don't get a neat little deduction on your statement every month titled "Management Fee" or something like that. Rather, the gains you make are just...less. Over the course of a long time (e.g., the life of a retirement account), high expense ratios can take a large cut out of your total principal, and those funds have no track record of performing any better than other hands-off index funds available to the average consumer.

That said, I think you also do get nice little fees charged by First Command for every contribution (forgot how they manifest, but it's something like "Custodian Fee").

Overall, FC's whole schtick is, "You're busy saving the world, let us give back to you by helping you take care of your money." Then they tie your money up in expensive, inefficient funds that are extremely difficult to get out of, and they sway young kids into buying trash whole life policies while they're at it.

A newbie investor could put very little effort into learning how to dump a monthly allocation of money into a set-and-forget Vanguard index fund and never look back at it again, should that be their desire -- and they'd likely come out with a LOT more when it was time to withdraw funds.

Edit to add: I just helped a friend transition to Vanguard from First Command, and her ~$100K of savings was split across something like 25 separate mutual fund tickers with like one to six thousand dollars in each one. Her statement she received from First Command was absolutely daunting. I'm going to wager that a company that has to diversify across 20-25 different mutual funds is probably making investing deliberately difficult for the consumer, thereby increasing the attractiveness of "just letting First Command keep doing what they're doing." But that's a completely uneducated hunch on my part.

 

[SynixMan]

On the investing front, that shit all seemed pretty daunting until I saw this. A good use of an hour of your time, but skip to ~23 mins in to really understand how high fees sap your growth.

FRONTLINE | The Retirement Gamble | Season 2013 ...

 

[Pags]

Make sure you don't have any kids, or plan to sell them off into slavery.

This here is the truth. You want to maximize your cashflow? Don't have kids. If you already have some, be like Kurtz and and sell the house, sell the car, sell the kids.

 

[MGoBrew11]

Take a bit to look into the expense ratios of each of the funds you are contributing to. The tricky thing about high expense ratio (i.e., high-fee) funds is that you don't get a neat little deduction on your statement every month titled "Management Fee" or something like that. Rather, the gains you make are just...less. Over the course of a long time (e.g., the life of a retirement account), high expense ratios can take a large cut out of your total principal, and those funds have no track record of performing any better than other hands-off index funds available to the average consumer.

That said, I think you also do get nice little fees charged by First Command for every contribution (forgot how they manifest, but it's something like "Custodian Fee").

Overall, FC's whole schtick is, "You're busy saving the world, let us give back to you by helping you take care of your money." Then they tie your money up in expensive, inefficient funds that are extremely difficult to get out of, and they sway young kids into buying trash whole life policies while they're at it.

A newbie investor could put very little effort into learning how to dump a monthly allocation of money into a set-and-forget Vanguard index fund and never look back at it again, should that be their desire -- and they'd likely come out with a LOT more when it was time to withdraw funds.

Edit to add: I just helped a friend transition to Vanguard from First Command, and her ~$100K of savings was split across something like 25 separate mutual fund tickers with like one to six thousand dollars in each one. Her statement she received from First Command was absolutely daunting. I'm going to wager that a company that has to diversify across 20-25 different mutual funds is probably making investing deliberately difficult for the consumer, thereby increasing the attractiveness of "just letting First Command keep doing what they're doing." But that's a completely uneducated hunch on my part.

I know I don’t have that issue (20-25 different funds). But I know you anyways. PM inbound.

 

[HAL Pilot]

This here is the truth. You want to maximize your cashflow? Don't have kids. If you already have some, be like Kurtz and and sell the house, sell the car, sell the kids.

Or kid (singular).

My one kid has cost me about a million bucks for college, gap year (applying for dental schools) and first 2 years of dental school. I figure there is another $300k to $400k outgoing before she's off the payroll.

Me and my stupid promises to a then 16 year old "I'll pay for whatever college you want to go to and if you can get in, I'll pay for medical/dental school". Of course the cheap ones never seemed to work out.

But I'd do it again. I'm just thankful I have the ability to do it.

 

[ABMD]

Take a bit to look into the expense ratios of each of the funds you are contributing to. The tricky thing about high expense ratio (i.e., high-fee) funds is that you don't get a neat little deduction on your statement every month titled "Management Fee" or something like that. Rather, the gains you make are just...less. Over the course of a long time (e.g., the life of a retirement account), high expense ratios can take a large cut out of your total principal, and those funds have no track record of performing any better than other hands-off index funds available to the average consumer.

That said, I think you also do get nice little fees charged by First Command for every contribution (forgot how they manifest, but it's something like "Custodian Fee").

Overall, FC's whole schtick is, "You're busy saving the world, let us give back to you by helping you take care of your money." Then they tie your money up in expensive, inefficient funds that are extremely difficult to get out of, and they sway young kids into buying trash whole life policies while they're at it.

A newbie investor could put very little effort into learning how to dump a monthly allocation of money into a set-and-forget Vanguard index fund and never look back at it again, should that be their desire -- and they'd likely come out with a LOT more when it was time to withdraw funds.

Edit to add: I just helped a friend transition to Vanguard from First Command, and her ~$100K of savings was split across something like 25 separate mutual fund tickers with like one to six thousand dollars in each one. Her statement she received from First Command was absolutely daunting. I'm going to wager that a company that has to diversify across 20-25 different mutual funds is probably making investing deliberately difficult for the consumer, thereby increasing the attractiveness of "just letting First Command keep doing what they're doing." But that's a completely uneducated hunch on my part.

There is a thing as too much diversification. 25 different funds, good grief. Just use an index fund and invest in dividend paying stocks if you want to gamble with individual stocks.

 

[exNavyOffRec]

I'll politely disagree with you, but in the interest of this discussion, won't go too in depth. Ultimately, I am mathematically convinced that if over those 30 years, if you invested the difference between the whole life and term life costs on your own, you'd end up better unless there was some real sweetheart of a deal on the death policy. Sure, you died at 30 years and 1 day, so your term life is over, but you have 30 years of compound interest that will yield roughly what the death benefit probably was anyway and with probable actual tax benefits. Ultimately, the whole life company makes money on the fact that it's paying you less than what they are getting in the market. The fact that something on the order of 98% of whole life policies never pay out because the owners cash out beforehand is a telling statistic - and what keeps the whole life industry alive. Also, as an industry, the sales are seedy: promising "guaranteed" returns is illegal but fairly common nonetheless, and saying your cash out distributions are "tax free" is a bold faced lie.

again, it depends, I have 500K whole and I pay 200 month for 30 years, if invested that 2400 per year over 30 years at 10% interest would yield 436,684, my cashout after 30 years is 358,000 so if I invested in something that maintained over 9% I would do better by investing, if it was at 9% I would essentially be even and if it was less than 9% than I do better with the insurance policy. I will say my per month rate is great as when I bought the policy I had been diagnosed with nothing so I am very very low risk.

You are right, the only reason insurance works is that few people actually utilize it, the best case is that a person buys term for 30 and never utilizes it, the next is a person who buys whole for 30 and then dies after paying 30 years of premiums sure the company pays out more than what they took in but it is better than paying out for the guy that buys a policy and dies a week later.

I do agree that in a perfect world if people followed what you said it would be fine, but unfortunately it isn't and I have seen too many cases where it didn't work out because they were under insured or not insured at all. I can't think of a single case where I have known a person that has died and the family didn't end up in some type of financial hardship (couldn't keep house, had to move into parents house, etc.......) being in insurance even though it isn't on the selling side I see how unprepared and undisciplined people are. If we had good classes talking about finances in high school I believe it would have an impact.

 

[taxi1]

My one kid has cost me about a million bucks for college, gap year (applying for dental schools) and first 2 years of dental school.

Thread drift, but it is criminal how the cost of higher ed has exploded. I was able to work my way through college (ODU) last century (@HAL Pilot, did you ever go to the Kings Head Inn in Norfolk?), it’d be impossible to even try now.

The biggest gift I’ve given my kids is no college debt.

 

[drgndrvr]

So if as a dumb LTJG, one opened a mutual fund and Roth IRA through First Command, where would one look to see if/where they’re sucking money away from er, that individual? Asking for a friend.

The money goes straight from checking to 3rd party (well known) brokerage firm...it’s not like FC ever “touches” it.

In addition to the expense ratios, you can see whether they 1) have a "load" meaning you pay something like 5% on purchase or redemption, 2) have high turnover (the fund manager buying and selling to try to beat the market which is a fool's errand) - this matters more for a regular taxable account (not a Roth or TIRA) but still is a sign of a garbage fund to me.

You can be fully diversified with a 2 fund or 3 fund portfolio - say a total stock market index fund and a total bond market index fund. The book The Little Red Book of Common Sense Investing opened my eyes.

Regarding the kids.....that's the one area where I'm all for the lifestyle creep. As an only child with no cousins or anything I felt very alone when both parents died in my 20s. We just had our third kid and while the cash outflows are painful and the days are often maddening, boy do I feel some joy from these little ones.

 

[Pags]

Or kid (singular).

My one kid has cost me about a million bucks for college, gap year (applying for dental schools) and first 2 years of dental school. I figure there is another $300k to $400k outgoing before she's off the payroll.

Me and my stupid promises to a then 16 year old "I'll pay for whatever college you want to go to and if you can get in, I'll pay for medical/dental school". Of course the cheap ones never seemed to work out.

But I'd do it again. I'm just thankful I have the ability to do it.

My comment on kids was said with tongue in cheek as my kids bring me different kinds of riches. But they ain't cheap (how can little people eat so much... ketchup?!) and I haven't even got to college yet. But, to stick with my theme, there's more to life than just maximizing your retirement.

That said, I often wonder what the heck my friends without kids do with all their time and money (that I perceive them to have).

 

[OscarMyers]

My comment on kids was said with tongue in cheek as my kids bring me different kinds of riches. But they ain't cheap (how can little people eat so much... ketchup?!) and I haven't even got to college yet. But, to stick with my theme, there's more to life than just maximizing your retirement.

That said, I often wonder what the heck my friends without kids do with all their time and money (that I perceive them to have).

Ketchup is one of the basic food groups! My four year old uses fish sticks and chicken nuggets as a vehicle to get more ketchup in his mouth. Kind of like a nugget spoon.... I'm just banking on a solid return on investment, hopefully at least one of of them is going to be successful.

 

[HSMPBR]

My comment on kids was said with tongue in cheek as my kids bring me different kinds of riches. But they ain't cheap (how can little people eat so much... ketchup?!) and I haven't even got to college yet. But, to stick with my theme, there's more to life than just maximizing your retirement.

That said, I often wonder what the heck my friends without kids do with all their time and money (that I perceive them to have).

Well, @HAL Pilot would probably say hookers and blow.