The Financial Benefits Of Joining The Military: Free Education, Great Retirement, And More!

Raising The Flag in Iwo Jima 1945

Raising The Flag in Iwo Jima 1945

The following is a terrific guest post from Spencer, a captain in the US Air Force, who gives a complete overview of the financial benefits of joining the military. Spencer has been publishing on Military Money Manual for the past three years, helping military folks achieve financial independence.

There are many different paths you can take in life. Blue collar, white collar, no collar – the jobs you do often reflect your upbringing. If you come from an affluent community or family, one path you might not have considered is joining the military. Military service has many rewards, some of which can be a free college education, an exciting non-standard job, travel opportunities, and the chance to do some amazing things around the world.

A college degree is a necessity to achieve substantial financial goals, unless you’re the next Mark Zuckerberg or Bill Gates. But college is getting more and more expensive every year, way outpacing inflation. Student loan debt only gets you a negative start on your journey to financial freedom. Alternatively, military service can enable you to get a free college degree, have a job lined up when you graduate, and make money while you go to school.

The Top 1% Net Worth Amounts By Age

Mega Mansion - What Is Considered Rich?

Tom and Gisele’s mansion

People like to throw around random net worth figures all the time when asked how much is considered rich or how much they would need to never work again. Often, the figures just sound nice, like saying “one meeeeleon dollars” without any mathematical justification.

This post puts some numbers behind ascertaining how much wealth one needs to be in the top 1%. Remember, having a large net worth is better than having a high income. The government goes after income more than it goes after wealth. For example, you can live in a $8 million mansion and get Universal Healthcare subsidies if you make less than ~$94,000 a year with a family of four.

So what do we know?

Based on my Top 1% Income Earners post, we know that in order to be in the top 1%, you’ve got to earn at least $380,000 in gross income a year. The data comes from the all-knowing IRS.

Based on my Net Worth For The Upper Middle Class post, we learn that the net worth range for the top 15% of all Americans between the ages of 45 – 74 is around $700,000 – $830,000.

Finally, I’ve shown numerous examples as to why earning roughly $200,000 – $250,000 gross a year per person and $300,000 a year per couple is the ideal income for maximum happiness. Being rich is sometimes a state of mind, and I’ll use these income figures in my analysis as well.

Given these data points, I’d like to construct two simple models to demonstrate what I think should be considered top 1% rich. All wealth and no income is not ideal. Similarly, all income and no wealth is not ideal either. There needs to be a balance.

Social Security Will Make Us All Millionaires In Retirement

Social Security Makes Us All MillionairesWhen I was driving home from San Mateo one day I took a wrong turn and ended up at Hillsdale Mall. There I saw an amazing relic, a Barnes & Noble bookstore! Before 2011, I used to spend an hour every week reading personal finance books at my local San Francisco B&N. It was a lot of fun, but like the trees in Dr Seuss’s story, The Lorax, the stores began disappearing.

There’s nobody I know under the age of 40 who believes Social Security will be paid in full when it’s time to collect. Maybe half of what’s owed, but certainly not 100%. As a result, many have smartly decided to write-off Social Security from their retirement plans in order to focus on accumulating enough assets on their own. Depending on an inefficient government during our golden years is dangerous. Instead, we must max out our 401ks and IRAs, while investing even more into after-tax investments.

Out of all the books on the Personal Finance bookshelf, I decided to pick one up on Social Security because it’s been off my financial radar screen for years. Here are some important bullet points we should all know about a program that will make us all millionaires if we work long enough!

The Average Net Worth By Age For The Upper Middle Class

Upper Middle Class LifestyleThe upper middle class, aka the mass affluent, are loosely defined as individuals with a net worth or investable assets between $100,000 to $2 million. Some also define upper middle class as those who are college educated with incomes in the top 15% – roughly $100,000 or greater for households or $63,000 or greater for individuals.

The upper middle class is different from the rich because there’s a good chance everybody can achieve mass affluent status if they work and save for a long enough period of time. The mass affluent didn’t inherit their money, they earned it through hard work. On the other hand, getting rich often takes a tremendous amount of luck.

Which States Are Best For Retirement?

Retiring In Hawaii

Hawaii, obviously?

America is amazing because we’re free to relocate anywhere in the country that suits our desires. A lot of people scoff at the idea of just moving because of family and job responsibilities. But when you can take a plane anywhere in the continental US in under six hours, telecommute from home, and FaceTime with people you care about, why wouldn’t you at least give moving to a nicer place a shot? There are even plenty of flexible job opportunities by the sharing economy that can help pay the bills during a transition.

The best states to live in have a combination of low taxes and incredible weather. California is awesome, but our taxes are horrendous and we’ve still got a budget deficit! Hawaii is also amazing, but food and housing are also costly. At least Hawaii’s sales tax is only 4-4.5% and pensions are state tax-free.

I’ve been to a large majority of the 50 States and spent 10 years on the East Coast before moving out West in 2001. I’m totally biased for California and Hawaii so I enlisted FS reader, Steve from Green Diet to help me put together an unbiased assessment of our country based on cost of living to see which states are best for retirement. 

Personal Capital Review – New Investment Features And A Meeting With The CEO

Bill Harris, CEO of Personal Capital

Bill Harris, CEO of Personal Capital

After 3.5 years of using Personal Capital’s free financial tools to track my net worth, manage my cash flow, and optimize my investments, it’s finally time I do a unique review of Personal Capital from the perspective of an entrepreneur, an affiliate blogger, an equity shareholder, and a consultant for the past 17 months (Nov 2013 – April 13, 2015).

I’ve highlighted in previous posts how I use Personal Capital to reduce portfolio fees and how to run various growth scenarios to better manage your 401(k) for retirement. Now I’d like to share with you some thoughts about the company after spending over 1,500 hours consulting with Personal Capital. On April 13, 2015 I officially started my new role as a special advisor to the firm.


One of my main concerns as a affiliate is the viability of the product I’m highlighting to readers. I’m inundated with product affiliate offers every day and decline 99% of them either because they are not value added, not well presented, or don’t have good usability. Your time and my time is valuable, so I only want to highlight the most useful products that will provide the most value.

The last thing I want is for the company I recommend to shutdown like Adaptu did in 2013 or Manilla in June 2014. Businesses fail all the time for many reasons, and it’s my goal to highlight long term product winners on Financial Samurai. To keep trading in and out of stocks (switching products) is a very suboptimal use of time and money.

Personal Capital recently celebrated its $1 billion in client assets under management milestone on January 20, 2015. This is a huge milestone the demonstrates Personal Capital’s legitimacy as one of the premier digital wealth advisors. The first $100 million took several years to accumulate, and the second $100 million took under one year by June 2013. As of mid-2015, the firm now has close to $1.5 billion in managed client assets.

Personal Capital offers free wealth management tools available for all of us, but only makes money when users elect to have at least $100,000 in assets managed by Personal Capital’s wealth advisors for 75 – 89 bps annual fee of assets. In a financial world dominated by big brand names such as Fidelity, Merrill Lynch, and Charles Schwab, Personal Capital’s biggest challenge is to answer a consumer’s question, “Why them?

Personal Capital’s competitive advantage is that they built their company from the ground up with technology at its core. As a result, they are much more flexible in tailoring offerings to meet consumer demand. By implementing a work force of financial advisors across the country on top of its technology platform they can leverage their proprietary financial planning software to help customers and more easily convert existing customers to participate in managed services. In other words, they are a technology-assisted registered investment adviser (RIA).


Given my background in finance, I always automatically approach a company as a potential investor and not just as a financial writer. I’ve got a couple private equity investments that are doing well, and I’m always looking for more if they’ll have me. Personal Capital closed a $25 million Series C funding in the summer of 2013 led by Crosslink Capital with participation of asset management giant BlackRock and previous investors Venture Partners and Venrock.

The continued ability for a company to raise money is always a good sign. But the most bullish point from an investor’s point of view is BlackRock’s participation since they manage over $1 trillion in assets and are not just venture capitalists. I’m sure BlackRock is figuring out ways in which they, too can leverage technology to gather more assets under management. By becoming a minority investor in Personal Capital, they are more privy to their technology. Furthermore, if Personal Capital ever decides to sell their entire company, BlackRock will surely get first dibs due to their long standing relationship.

In October 2014, Personal Capital raised $50 million in a Series D round led by USAA, Corsair, and BBVA. USAA is one of the most respect financial institutions in the world and I’m very happy they’ve taken the lead. The total amount invested over the four year old company comes out to $102.3 million. Personal Capital is very well capitalized and here to stay.

Personal Capital currently has over 800,000 users with in excess of $100 billion assets being tracked on the platform (as of 2Q2015). They actively manage roughly $1.4 billion in assets under management and are growing at a 10% month over month clip. The entire wealth management market is roughly $32 trillion for individually managed investable assets in the US. The upside is huge.

In Silicon Valley, it’s all about B for Billion. Who is going to create the next billion dollar+ company? I believe Personal Capital will get there over time and I would invest in the company if I could.


Bill Harris, CEO is obviously financially independent after his time as CEO of both Paypal and Intuit. So I’m always curious to know what makes someone who doesn’t have to work still work so hard. I’ve asked myself these same questions before in posts such as, “Overcoming The One More Year Syndrome,” and “How Does It Feel To Be Financially Independent.” I still spend hours writing posts, visiting companies, and responding to comments on Financial Samurai despite the six figure passive income stream developed after 15 years of work.

What makes Bill tick is the desire to create something out of nothing and see things through until a successful outcome is achieved. Bill says, “Personal Capital is a culmination of my career.” Although Bill was CEO of Paypal and Intuit, he didn’t create Paypal or Intuit. As a co-founder of a company, there’s nothing more satisfying than seeing your baby grow into something meaningful. Perhaps the situation is analogous to being a biological father vs. a stepfather. You’re still proud of your child no matter what. But if you have adopted children (a company you lead, but did not found), then you’re always going to be curious what it’s like to have a biological child to raise as well.

It seems obvious to me that Bill’s main goal isn’t about making more money for himself, but about making Personal Capital the best online wealth management product possible. “Charles Schwab disrupted the wealth management industry 25 years ago. I think we can do the same with Personal Capital today,” says Bill. Here’s a short video from Bill describing his vision of Personal Capital.


Personal Capital has brought their online platform mobile with new app launches on iOS and Android lead by Jim Del Favero, CPO. The main feature that has saved me the most immediate money is Personal Capital’s Investing tab which analyzes your portfolios’ risk metrics, asset allocation, and fees.

I ran my 401(k) through Personal Capital’s 401(k) Fee Analyzer and it showed I was paying $1,750 in annual portfolio fees I had no idea I was paying thanks to a very expensive Fidelity fund. I ended up selling the fund and transferring assets into a Vanguard Large Cap fund which cut my annual portfolio fees down by 80%. I highly recommend everyone run their 401(k)s through the 401(k) Fee Analyzer as well to get an idea of how much fees are robbing you of your retirement years and portfolio performance.

Personal Capital is making their Investing tab more educational and interactive for users. Take a look at the screenshot below of my latest rollover IRA allocation. The first thing that should jump out at you is the enormous percentage I had in cash after I took profits on the majority of my holdings recently. My rollover IRA is my punt portfolio where I’m fortune hunting for high growth stocks. Such an extreme allocation of assets serves nicely to explain the following new investment analysis charts that Personal Capital now provides.

Personal Capital Investment Checkup Tab

What you’ll notice in the Allocation Comparison chart above are the new “Target Allocation,” “Historical Performance,” “Future Projections,” and “Risk & Return” tabs along with the target allocation and current allocation bar charts based on investor profile questions I’ve answered when I first signed up. You are always able to take the questionnaire again if your risk profile changes.

Personal Capital Historical Performance

The above Historical Performance chart basically shows how my existing cash heavy portfolio would have performed since 1992 if I kept the allocation the same. Much less volatile, but much less money! Let’s take a look at the next chart to estimate future performance.

Personal Capital Future Projections

The above Future Projections tab shows how I am projected to have $400,000 less in retirement than projections if I keep my existing portfolio allocation. What’s interesting is that the “10% Worst Outcome At Retirement” for my Current Allocation is still WORSE than a higher risk Target Allocation. The more proper point of comparison is to compare Current Allocation with Current Allocation and Target Allocation with Target Allocation. Once you do, you can see a wider volatility. The Future Projections is based off the initial recommended asset allocation based on my own risk metrics.

Risk Return Personal Capital

The above Risk & Return chart shows where I am on the Efficient Frontier Curve. The Efficient Frontier represents the best asset class mixes. Based on historical results, it is the set of allocations which offer the highest expected returns for each level of risk. The idea is to be on the curve, and not below or above the curve. The example used in the Personal Capital video discusses an umbrella store which could improve its sales returns by adding sunscreen on its shelves during the summer. As you can see from the chart, my current allocation is below the curve.

Personal Capital Recommendation Of Assets

The final chart shows the actual hard dollar target allocation amounts to be deployed on the Efficient Frontier curve. The tricky thing to figure out is which index funds to buy to achieve the best allocation for the best risk-adjusted returns over time. This is where Personal Capital’s financial advisors can hep you, or where you can do research on your own.

It’s important to realize that outputs depend on inputs. The recommended asset allocation Personal Capital spits out depends on your individual risk tolerance as determined in the initial questionnaire profile. The beauty of Personal Capital’s software is that it can make tailored recommendations for each user.

So how do you replicate the above charts for your own portfolio? Easy. All you have to do is link the portfolios you want to screen onto Personal Capital’s dashboard and then click the Investing tab in the top right and then click Investment Checkup. Personal capital will automatically produce the above charts and recommendations for you. You can also toggle between individual portfolios to do the same analysis e.g. 401(k), after-tax portfolio, etc.


Award Winning Technology – Personal Capital can be used on the computer, tablet, or smart phone – iOS and Android. I speak with the CPO, Jim Del Favero on a monthly basis because I’m a consultant and he keeps me in the loop. Next up is integration with Zillow for real estate valuation tracking, which will be great.

Easy To Use – All you’ve got to do is sign up, press the “+” to link all your desired accounts, fill in the respective user names and passwords and everything will get downloaded on the Personal Capital dashboard.

E-mail updates – Every week you’ll get an e-mail update of your net worth, the latest Personal Capital news, and a snapshot of the markets. You can also subscribe to Daily Capital, the Personal Capital blog to gain insights.

Tax Loss Harvesting – Personal Capital practices tax loss harvesting and tax location for their clients. Tax loss harvesting alone gains up to 1% in after tax return a year.

Smart Indexing – Smart Indexing aka Tactical Weighting is the practice of investing in equal weighted sectors or styles. In bull markets, one sector can grow to an outsized percentage, such as during the dot com bubble or the financial bubble. When the market corrected, people lost a lot of money. But if they practiced Smart Indexing, by constantly staying disciplined with equal weightings in the sectors, they would have outperformed.

Award Winning Content – Personal Capital also produces some of the best personal finance content on the web for all its users. I’ve been the Managing Editor of the blog since November 2013, and the goal is to entertain, educate, and boost reader’s net worth.


It’s really amazing how many free resources we have at our fingertips thanks to technology and the internet. Managing our own money has never been easier. The business model of leveraging the internet to gather assets under management makes a lot of sense due to scalability. The key for Personal Capital is hiring enough financially savvy financial advisors and continuously innovate their technology platform.

I hope after spending three years as a user of Personal Capital, highlighting various ways in which I use Personal Capital’s tools to create more wealth, and spending over a thousand hours meeting with senior management, research, and the advisors that I’ve provided the most comprehensive Personal Capital review online. There’s no other personal finance blogger who has the experience and insights to be able to write as thorough a review.

If you’re looking for a great way to track your net worth, analyze your portfolio fees, manage your cash flow, and get a handle on your finances, I recommend signing up for Personal Capital and linking your accounts. It’s free and is empowering people to take control of their wealth. May 2015 be the year that you super charge your net worth and gain a little more financial freedom!

Updated on April 28, 2015



Ranking The Best Passive Income Investments

Passive Income Streams Allows You To Be Free

In order to relax, you must first work very, very hard!

After about the 30th day in a row of working 12+ hour days and eating rubber chicken dinners at the free cafeteria down at 85 Broad Street, I decided I had enough. There was no way I could last for more than five years working in a pressure cooker environment like Wall Street. I became obsessed with generating passive income starting in 1999.

We’ve discussed how to get started building passive income for financial freedom in a previous post. Now I’d like to rank the various passive income streams based on risk, return, and feasibility. The rankings are somewhat subjective, but they are born from my own real life experiences attempting to generate multiple types of passive income sources over the past 16 years.

The passive income journey is a long one. But thanks to innovation and technology, the ability to generate meaningful passive income is accelerating!