The Savings Puzzle
The Savings Deposit Program (SDP)
As we delve into the realm of military finance, one often finds it overshadowed by tales of economic hardships faced by servicemen and women. Yet within these narratives, an under-appreciated subplot lurks – the story of the Savings Deposit Program (SDP).
Imagine our stage with two key players – Mark, a hardworking civilian, and Sarah, a deployed National Guard member. Each has a nest egg of $10,000, eager to grow it. Mark, walking the common path, puts his money in a standard civilian savings account with an average interest rate of 0.06% per annum. Sarah, having been deployed in a combat zone, turns to the SDP, which offers a remarkable guaranteed annual return of 10%.
Fast-forward a year. Mark’s savings have only inched forward to $10,006, while Sarah’s nest egg has bloomed to $11,000. This juxtaposition starkly illuminates the unparalleled opportunity presented by the SDP.
However, the SDP, akin to a powerful yet delicate instrument, requires precise handling. It is only available after 30 days of deployment in a combat zone. Deposits can be done in myriad ways, ranging from allotments from military pay to personal checks.
It’s important to note the SDP’s largesse is temporally bound. The 10% interest applies only during active deployment and up to 90 days post-deployment. Hence, an astute financial transition becomes necessary – shifting the accumulated wealth into another high-yield savings or investment account post-SDP.
To encapsulate, the SDP, though often sidelined in discussions of military finance, can serve as an influential ally in achieving financial stability. For those who have the opportunity to utilize it, the SDP is a potent economic tool that can greatly impact the financial trajectory of National Guard members deployed overseas.
Up to this point in our series, we have discussed resources as it relates to the serving member. In the coming blogs, we will broaden our lens and look at the family, starting with The Battle for the Homefront.
As is always the case, if you have questions about your personal situation, feel free to reach out to us. Avery Rock Financial, LLC is a fiduciary investment advisory firm, which means we put your needs ahead of of our own. Until the next time, thank you so much for joining us.
References:
- Defense Finance and Accounting Service. (2020). Savings Deposit Program. Available at: https://www.dfas.mil/militarymembers/payentitlements/sdp.html
- Federal Reserve Bank of St. Louis. (2021). Interest Rates, Aggregate Reserves of Depository Institutions, and the Monetary Base – H.3. Available at: https://fred.stlouisfed.org/series/IOER
- National Guard Bureau. (2020). Financial Management Awareness Program. Available at: https://www.nationalguard.mil/Leadership/Joint-Staff/J-1/Manpower/FM-A/
Avery Rock Financial, LLC is a registered investment adviser. The information in this material is for educational purposes only, is not intended to predict or guarantee future market performance, and is not intended to act as individualized tax, legal, financial, or investment advice. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Please consult a qualified attorney or tax professional for individualized legal or tax advice. Please contact a financial advisor for specific information regarding your individualized financial and investment planning needs.
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