Investor Bulletin: Savings and Investing Basics for Military Personnel

The SEC’s Office of Investor Education and Advocacy has issued this Investor Bulletin to help military personnel make more informed savings and investing decisions and avoid common scams. 

Below is a list of ten suggestions that may help military personnel – and any investor – make better investments and avoid fraud. 

Paying off high interest debt may be your best strategy.  Paying off debt over time can be expensive.  Few investments pay as well as eliminating high-interest debt on credit cards or other loans.  You should also take steps to improve your credit score, which matters when applying for a new job or mortgage, or renting an apartment. 

Financial security is best reached by saving and investing over a long period of time.  Set goals and make a plan.  Smart money management begins with savings.  Determine how much you need to save each week, month, or year to meet your goals.  By investing some of that money, you can make it work for you through appreciation and compound interest.  

Take advantage of the Thrift Savings Plan (TSP).  The TSP is the government’s defined contribution plan and one of your best options for retirement savings.  Contributions are automatically deducted from salary and either “tax-deferred” or “tax-exempt” depending upon the type of pay the contributions come from.  The TSP website ( explains the benefits available to the military. 

Be wary of any investment that sounds too good to be true.  Claims that an investment is a “CAN’T MISS” opportunity or a “BREAKOUT STOCK PICK,” or promises of “GUARANTEED RETURNS,” are classic warning signs of fraud.  Be alert to any promises of high returns with little or no risk.

Look out for pressure to buy RIGHT NOW.  Don’t be pressured into buying an investment before you have a chance to think about and research the “opportunity.”

Be Alert to Affinity Fraud.  Affinity frauds target members of identifiable groups, such as the elderly, religious or ethnic communities, or the military.  Even if you know the person making the investment offer, be sure to check out the investment and the person’s background – no matter how trustworthy the person seems.

Affinity Fraud Targeted at the Military

In 2013, the SEC halted a hedge fund investment scheme by a former Marine who pretended to be a successful trader to defraud fellow veterans, current military, and other investors.  The SEC alleged that the defendant raised nearly $1.8 million from investors, but invested less than half of that amount while using more than $400,000 for personal expenses such as a Hollywood mansion, luxury automobile, and extravagant tabs at high-end nightclubs.  The defendant allegedly generated phony hedge fund account statements showing annual returns exceeding 200 percent for 2012, when the hedge fund actually lost money.  According to the SEC’s complaint, the defendant solicited friends, family members, and fellow veterans to invest in his hedge fund, and the defendant controlled a so-called charity called the Veterans Financial Education Network (VFEN) that claims to teach veterans how to understand and manage their money. 

Reminder: Never make an investment based solely on the recommendation of a member of an organization or group to which you belong.  A key to avoiding investment fraud, including scams that target specific groups, is using independent information to evaluate financial opportunities.

Check out the qualifications of an investment professional – even one located near a military base.  Details on an investment professional’s background are available through the SEC’s Investment Adviser Public Disclosure website and FINRA’s BrokerCheck.  If you have questions, call the SEC’s toll-free investor assistance line at (800) 732-0330. 

Don’t ignore investment fees.  Expenses associated with purchasing, holding, and selling an investment vary from product to product, and even small differences in these costs can have a significant impact on earnings over time.  

Diversification can reduce the overall risk of an investment portfolio.  By picking a mix of investments, you may be able to limit your losses and reduce the fluctuations of your investment returns without sacrificing too much in potential gains.  Some investors achieve diversification through ownership of mutual funds or exchange-traded funds. 

Be on the lookout for fraudulent unregistered offerings.  Any offer or sale of securities must be either registered with the SEC or exempt from registration.  Otherwise, it is illegal.  While many companies that do not register or file reports with the SEC may be exempt from registration, you assume more risk when you invest in a company about which little or no information is publicly available.  You should always check whether an offering is registered with the SEC by using the SEC’s EDGAR database or contacting the SEC’s toll-free investor assistance line at (800) 732-0330.

Related Information

We offer educational materials so that investors can invest wisely and avoid fraud: 

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