Saturday, September 15, 2012

Savings Deposit Program

For many, the perk of a deployment is the extra money you will be making.  Combining basic allowance for subsistence, hostile fire pay, separation pay, and a tax free paycheck makes for a nice increase in pay.  But there is another way you inflate your pay while deployed, the Savings Deposit Program (SDP).  The SDP allows for service members to deposit up to $10,000 and earn interest at a 10% rate, compounded quarterly while you are deployed, and an additional quarter upon your return from deployment.  Many of the service members I have talked with about investing have been scared to invest due to the potential loss of principle.  If you are in this boat, then pay attention.   There is no risk.  The SDP is possibly the best no risk investment out there.  As of today a one year Certificate of Deposit will yield just over 1% and I Series US Savings Bonds are currently yielding 2.2%.  

So how much can your investment in the SDP yield?  Well let’s just do a quick calculation of $10,000 placed in the beginning.  Then compile your money at 10% quarterly for five quarters.  Four quarters for your yearlong deployment and the fifth quarter is for the extra three months it can collect interest after you return from the deployment.  In the end, you pocket  an extra $1,314 when you collect your money back.

 I hope by now the free money with no risk has captured your attention.  So let’s get you qualified to start investing.  To qualify, you must be deployed to a region where you will qualify for hostile fire pay for a minimum for thirty consecutive days or at least one day of three consecutive months.  The thirty day requirement gives yourself some time to get your finances straight and see how much money you can invest.  You do not have to invest all of your money in the beginning.  Instead you can add to your investment every month with an allotment.

You can collect the funds back upon completion of your deployment.  The funds will be direct deposited to your account after 120 days redeployed.  If you would like to request your money sooner, you can request the funds with your MyPay account.  Under times of emergency, you can request your funds while still deployed; making this a safe and liquid investment opportunity.

Now you have decided to start your SDP where do we begin?  Simple, meet with your unit’s S-1 or your local finance office to begin your investment. 

Check back in about a week when I will have a review of a new peer to peer lending research tool called Number Whale.  As with any form of investing, having the ability to perform research gives you the edge.  Follow the link to their site to pre-register and receive discounts at their October launch.

1 comment:

  1. I found your last post very informative. However, what advise (if any) do you have for the spouses and/or families back home? In what ways can the families save and/or make their monies grow?