Five investment options for defence personnel

• Two big financial goals – medical necessities and retirement pension – are taken care of to a large extent.
  
• Systematic investment plans (SIPs) are an ideal investment option due to regular monthly income.
  
• Buying property can be a good long-term investment, especially given the housing benefits and loans available to defence personnel.
  

All of us go to bed at night knowing that the men at our borders are there to protect us. But the lives of defence personnel are different, not only when it comes to their jobs, but also to their finances.

First, they might be posted at extremely remote locations where it is very difficult to get financial advice or access to banking and investment products. Also, the demands of their career are such that it relegates financial planning low down in their to-do list.

“Being a government servant, two big financial goals of medical necessities and retirement pension are taken care of to a large extent. But then there are many more requirements of life which need careful planning,” says Col. Sanjeev Govila (Retd), a SEBI Registered Investment Advisor (RIA), and CEO, Hum Fauji Initiatives, a financial planning firm.

Children’s graduation and post-graduation, their marriages, purchase of a house when they’re close to retirement, good vacations post-retirement, change of car, charity, indulging in passions which may need money, etc are likely financial goals which need to be carefully planned for.

We take a look at five investment options defence personnel may consider.

Fixed deposits: Fixed deposits are a good investment choice for defence personnel due to their safety and simplicity. They offer guaranteed returns, minimising risks associated with market fluctuations. For military personnel with unpredictable schedules, FDs provide flexibility in terms of tenures and can be easily managed from anywhere.

Moreover, the guaranteed interest earnings add to financial stability, making it a good choice for long-term planning and security, which matches the disciplined and secure aspects of military life.

Equity investments: Defence personnel, like any other citizen, are allowed to invest in stocks / mutual funds or any other investment products. “However, they might have certain restrictions, especially officers holding sensitive positions. Such individuals might need to inform their respective cadres about their investments to avoid conflicts of interest,” says Bhuvanaa Shreeram, co-founder and head of financial planning, House of Alpha, a financial planning firm.

When it comes to equity, the best suited investment option is mutual funds. “Systematic investment plans (SIPs) are ideally suited due to regular monthly income. However, thorough research, long-term outlook and regular monitoring is important,” says Govila.

Sukanya Samriddhi Yojana (SSY): Sukanya Samriddhi Yojana is another investment option military personnel can consider if they have a girl child. It provides a secure and tax-saving avenue for their daughters' future. SSY offers an attractive interest rate, along with tax deductions under Section 80C of the Income Tax Act.

For defence personnel frequently posted to remote areas, SSY can be conveniently managed online, ensuring consistent savings for their daughters' education and marriage. Its assured returns, safety, and tax benefits make it an appealing option, aligning with their commitment to secure their family's financial well-being.

Real Estate: “Buying property can be a good long-term investment, especially given the housing benefits and loans available to defence personnel. Although while in service they will be provided a place to stay, once they retire they will need a comfortable house to live in,” says Shreeram.

“Start saving for a house early through SIPs in mutual funds and buy a house around 50 years of age when plans to finally settle down are concrete. No need for a second house,” says Govila.

Gold: Gold is a good investment choice for defence personnel due to its stability, liquidity, and security. It acts as a hedge against economic uncertainties, offering protection against inflation and currency fluctuations.

Gold investments, such as Sovereign Gold Bonds (SGBs) and Gold Exchange-Traded Funds (ETFs), provide the convenience of electronic holdings and easy liquidity, aligning with the mobile lifestyle of military personnel.

Armed forces personnel experience unique service conditions, and their financial situations can vary significantly. Nevertheless, the fundamental principles of financial planning and investment are applicable to them. With careful planning and disciplined execution, there's no reason they cannot achieve a financially secure and dignified life.