The Nation runs on the sweat of farmers and the sacrifice of the armed forces. Serving in the Army, Navy or the Air force is the dream of many young men and women in our country. The respect this job commands is just too much to count. As you a man who serves in the defence forces guard our Nation’s boundaries, you just cannot forget financial planning. Defence personnel retire early. Officers may retire in their late 40s or early 50s.
Yes, the defence personnel enjoy a lot of perks, benefits and even a pension for serving in the armed forces, But, this doesn’t exclude them from sound financial planning.
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After demonetization, banks were flush with cash and cut fixed deposit and savings bank rates. Citizens who used to invest in FDs and other traditional investments, pumped money in mutual funds. The year 2017 saw record inflows in mutual funds via SIPs.
Now things are different. Inflation is back. Inflows into equity mutual fund schemes including ELSS have declined for 3 months in a row. RBI has gone for back to back repo hikes in its bi-monthly policy review. The repo rate has been hiked from 6% to 6.5%. Banks have started increasing FD rates, bringing a smile on the faces of conservative investors, senior citizens and ex-defence personnel.
HDFC Bank has increased FD rates on various maturities by up to 0.6 percentage points. SBI will offer an interest rate of 6.7% for term deposits of 1-2 years, up from the existing 6.65%. Chances are more banks will raise FD rates and it’s a good idea for defence personnel to invest some money in FDs.
SEE ALSO: Financial Plans For Retirement Benefits
You can invest in the SCSS if you are 60 years or more. Ex-servicemen are eligible to invest in the senior citizen savings scheme (SCSS), regardless of the above age limit. A joint account can be opened in SCSS with spouse.
An investment in SCSS is extremely safe and comes with a Sovereign Guarantee. SCSS offers 8.3% a year (January-March quarter), payable quarterly and interest is taxed. Rates are revised each quarter and once you invest in SCSS, the rates remain fixed across the tenure. The minimum balance in SCSS must not exceed Rs 15 Lakhs.
The investment in SCSS enjoys tax benefits up to Rs 1.5 Lakhs a year under Section 80C of the income tax act and premature withdrawals are allowed. SCSS has 5 year tenure and can be extended by a further 3 years on maturity of the scheme. TDS is deducted at source on interest if the amount of interest exceeds Rs 10,000 a year.
The rules of financial planning for ex-servicemen are the same as for you and me.
A soldier is all about discipline. He knows how to hold a job. In the US, retired personnel of the armed forces get jobs in the defence industry. They work in Lockheed Martin or Heckler and Koch. Sadly, not many ex-servicemen work in the defence industry or take up jobs in Private Companies. But, all this is changing. Cab aggregator Ola had come up with a programme to help ex-servicemen called the “Ola Sainik” in 2015. More than 1 Lakh ex-servicemen will be absorbed as entrepreneurs on the Ola Platform by 2020. A few thousand ex-servicemen are already on board the Ola Platform.
Rival cab aggregator Uber, is not far behind and had launched the “UberFauji” programme. Ola and Uber have been facing problems with a few unscrupulous drivers and problems associated with background verification. Hiring ex-servicemen can solve these problems. Soldiers are all about discipline and Ola and Uber are reaping the benefits. It’s a win-win for both parties. Ex-servicemen get the benefits of high income and flexible timings.
An ex-serviceman who drives a car for a famous cab aggregator said that as a Punjabi and ex-serviceman, I can drive anything. He won the best-rated driver award in a particular region and also a cash reward and a gift.
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