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Say I'm a federal employee and as far as retirement and healthcare, everything is smooth sailing, I'm well on track to retire comfortably with a pension in lets say 2045. Also consider zero debt, no car payment, and the typical 3-month security fund.

I'm supposed to do some work overseas in the next year, and conservatively I will come back with 50-80k in hand tax-free. During this time I will not hold residence in the US so will not be paying any mortgage or rent during that time.

Question is, if you essentially have this money and no immediate thing to purchase or put money towards, what is the best way to build wealth with that kind of liquidity?

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  • To me, there's no real difference between this question and dozens of other similar questions - it depends on your risk tolerance, if you want active or passive investment, etc. I don't think this is the right forum for specific recommendations.
    – D Stanley
    Commented Oct 3, 2019 at 18:49
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    Off-topic, but how can you just leave your civil service job 6+ months and then come back to it?
    – RonJohn
    Commented Oct 3, 2019 at 18:50
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    Are you a US citizen? The IRS will tax you no matter where in the world you go.
    – Ben Voigt
    Commented Oct 3, 2019 at 20:06
  • @RonJohn: some parts of the US government send civilians to other countries to work. They stay from several months to several years.
    – mhoran_psprep
    Commented Oct 4, 2019 at 10:17
  • @BenVoigt Some pay oversees for the US military is tax free. That is why some members of the military accept their reenlistment bonus while in a war zone. It saves them money.
    – mhoran_psprep
    Commented Oct 4, 2019 at 10:19

2 Answers 2

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I like to follow the mantra of "give some, spend some, save some". It helps one decide no matter how much extra there is, or if this is extra being made over time or a lump sum. In your case, you are citing a range of 30K, which could buy a pretty nice new car.

So I would give some, and lean towards 10%. This can be spread across several charities or one that is near and dear to your heart. One charity that I think is super cool, and one I am raising money for right now, is Ronald McDonald house. If you are not familiar they provide housing for the families that have sick children in the hospital. That is a pretty good cause.

I would spend some. Lets assume that you are going to Moscow, and hate the cold. Perhaps an extended beach vacation is your reward for doing that time. Or perhaps you are a geek about certain technology. It could be electronic or not. For example you may want to buy a new high end bicycle or a car. For me, I would stick to no more than 10-15%, but you could go as high as 40%.

The rest should be saved/invested. This could be in something like a ROTH ira, or just a plain old taxable investment account. It is very freeing to have money invested not hindered by tax laws.

For the investment approach, I'd follow the 3 fund boglehead approach.

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Putting it in total stock market index funds with a low management expense ratio is statistically the best bet for any long-term investment. At a 10% growth rate (long-term average of the market) 50K would be worth ~541K when you retire. If you follow the 4% rule you should be able to draw down 21.7K extra every year indefinitely which might make your retirement a bit nicer.

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