Ask June: Purchasing a Home While in the Military

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Q: Hi, June. I have been in the military for four years. I am 23 years of age. A year ago I started a Roth IRA, a mutual fund and the TSP. I am currently contributing the max in the Roth, $100 dollars a month in the mutual fund, and 10% in TSP. I think I might ultimately retire military. I plan on switching from enlisted to officer in about a year or two. My question is, do you think it is wise to invest in a house not knowing where I will be in a year or two? Or is it wise, or not, to purchase a home while in the military? Thank you.

-Pringle, Fayetteville, N.C.

A: Two thumbs up! You've definitely got your financial "game face" on! Buying a house may be a great decision -- even while you're in the military ... just not yet. By saving in the pre-tax TSP, the tax-free Roth, and the currently taxable mutual fund account you're hitting a trifecta on the savings front! Great job.

Under almost any circumstances, it is not advisable to buy a house as a one or two year proposition -- especially with your own situation in a state of flux. Make no mistake about it: Real estate is a long-term investment of 10 or more years. There have been times in the real estate market where one could buy a house and sell it at a profit the next year. But that is certainly not the norm! How about this: Make your mutual fund account a "house fund." Focus on increasing your monthly contributions to build up this account, and then in the future, when you have a better idea of where you're going, you'll have money to make a cash down payment, buy furniture, and really settle in ... on your terms.

Down the line, if you arrive at a new duty station and just have to buy, keep in mind that when you PCS (permanent change of station), you'll have a couple of decisions to make. Do you want to sell? Even at a loss (which is not tax deductible). Or do you want to be a landlord? Keep up the excellent work! And thank you for your service. 

June Lantz Walbert is a CERTIFIED FINANCIAL PLANNER practitioner with USAA Financial Planning Services. She is also a lieu­tenant colonel in the U.S. Army Reserve with 20 years of service. Walbert's basic branch is Air Defense Artillery. She writes a weekly advice column, "Ask June" on Follow June @AskJune_usaa.

Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP and CERTIFIED FINANCIAL PLANNER in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

Views and opinions expressed by members are for informational purposes only and should not be deemed as an endorsement by USAA.

The Motley Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 13, 2011, at 4:27 PM, kleyau wrote:

    Pringle, if you like Ft. Bragg, it's the easiest base to get "lost in for a career," so to speak. There's a lot of real estate agents that also work as rental managers for soldiers, as well.

    Ask around, your upper nco's and officers often have several houses in different locations. It's not an easy situation to own houses when you have to move, but the Army is full of soldiers that can help you out on this. About a fourth of my section own houses in different states, one guy owns 5.

    But again, realize that it can be an extremely difficult situation if you're not prepared. If you decide to buy a house around a base, make sure you know the anticipated troop strength of that base, especially when the military is the major employer in town. Fayetteville should be decent for awhile in this respect, but location is definitely everything there.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1422512, ~/Articles/ArticleHandler.aspx, 10/22/2016 3:09:40 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 5 hours ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes