FOR DEFENCE SERVICES PERSONNEL
My first career choice was to serve in Defence Services and I have gained some very valuable experience from my 24 years of service in the army. Over all these years during training and while in service, we made many friends.My sincere desire is to help this extended community of mine which has always been so close to my heart. I trust them to support my effort and make it a grand success. Following are my broad recommendations for a general twenty years plan for services officers. You need to follow the financial planning process and develop the correct attitude towards money and be self disciplined in your saving habit. Here is the special package for your consideration.
Aim
You should have the freedom after twenty years of service to choose between continuing service and doing a second career.Secondly you should move close to achieving the Financial Freedom if not achieved by then.
FIRST FIVE YEARS
• First house
It may be even a studio apartment or one bedroom flat but at a place which is likely to appreciate and where your family can mange to look after aspects like rent collection, changing tenants etc. You can thus leverage accommodation provided by the service in creating an asset as early as possible.Tax advatage is another factor in your favour.
• Savings for retirement in DSOP-Do not withdraw please.
• Financial Plans to include funds for own marriage and retirement planning.
SECOND FIVE YEARS
In addition to above
• Understanding of equity as an investment, involve your spouse in it.
• Increase savings after marriage, plan for a family and children's education.
• Select likely place to settle after retirement and plan for a second and probably a retirement home.
THIRD FIVE YEARS
In addition to above
• Second house preferably at selected place of residence.
• Avail study leave or further studies for improving second career prospects.
FOURTH FIVE YEARS
Reducing housing loans.
• Opening of PPF accounts for self and family members
While account of spouse can be opened even earlier, others are mentioned here as service provident fund stops compulsorily after the retirement and PPF takes seven years to be flexible enough and advantageous. (See section on Provident Funds on the site).Saved amounts in childrens' accounts help them to pick up saving habit and give them an initial start.
Recommended Guidelines
1. Be smart and correct in selecting your life partner for suitability in service
life.Do not marry in a hurry and repent at leisure.
2. Always, pre pone buying an appreciating asset (e.g. a house or land) and
post pone buying a depreciating asset (e.g. a car) .
3. As you are provided service accommodation buying and renting out a house
is a good option to create an asset.Over a longer service period making two
houses is also possible and should be considered.
4. Avoid withdrawals from Provident Fund for expenses like car and use it only
for a house or plot margin money, if at all you need to.
5. Be happy and enjoy the service life, it offers excellent quality of life to
professionals. Do your job well but don’t go out of your way and compromise
on your values and ethics for the sake of being in "good books of the boss".
Doing two careers in one life has many advantages too and it’s outside the rat
race, consider it as an option and plan for it .