Saving for First Investment Property

3 Replies

I am 18 and will be joining the navy in June. I am planning on saving as much as I can during my 4 year enlistment. I want to save enough so that I can buy a duplex or triplex to house hack when I get out. My question is if it would be worth it to continue contributing $6000 a year to my ROTH IRA or if it would be better to just invest in an index fund so that my money is not locked up.

Just wanted to say good on you man. Planning and taking action at 18 years old like this is awesome. You'll be set. Stay disciplined. IMO, contributing to a tax advantaged retirement account is generally a good idea. I don't know what options you have available, but personally I prefer to defer taxation down the road as much as possible. More capital to invest means more capital working for you!

@Ben Pepin

Echoing what Taylor L said, tax-advantaged accounts are an important part of your portfolio. I recommend starting now, allowing with a budget. A brokerage account is also a good idea, and I recommend reading The Simple Path To Wealth. The book does a fantastic job laying out the paths for simple investing. 

Good Luck! 

Sincerely, 

Josh 

@Ben Pepin Congrats on saving and investing so early in your life! I wish I would have done the same.

I want to echo what has been said and that you should save in tax advantage accounts first. If you aren't already, I would start with your TSP to get the tax deductions and the match. This is free money you are leaving on table if you are not at least investing up to the match.

When you say "invest in an index fund", do you mean a brokerage account? An index fund is a type of fund, like a mutual fund, that invests in a basket of stocks tracking a certain index. You can invest in index funds in your Roth. While your Roth is "locked up" until you are 59 1/2 except for your contributions, a brokerage account is flexible as in you are not limited on what you can invest in. If you don't want to invest in the stock market, then you can sell what you have and move it into something else. Be wary of taxes when you buy and sell in a brokerage account. These are the most tax disadvantage accounts, but are the most flexible. 

There are ways to invest in other types of securities other than stocks in a Roth, such as using a self directed IRA, but these strategies are more complicated and probably not advised unless you know what you are doing and have a nest egg saved up.

The book "A Simple Path To Wealth" is an excellent resource and can give you a good roadmap on your investing career.

Good luck!

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