Read in: 3mins, Published On , 29 Nov 2016 By Times Of India
At the basic level, the rules of financial planning remain the same: A part of your income should go towards monthly expenses, a part towards repayment of liabilities (if any), a part into saving, investment and protection, and a small part towards discretionary spends like entertainment, holidays, vacations etc. For salaried people with a regular stream of income, following these rules is easier than someone in business with an irregular stream of income. Even among the salaried people, there could be some variations among those who are in government jobs and those who are employed in the private sector.
Among the government employees, people who are in the armed forces, there are some unique issues which often come as impediments for them to stick to a financial plan like other government employees. Some issues are also because of the nature of their job, financial planners and advisors say. Here are some of those:
POSTINGS AT REMOTE OR LESS-ACCESSIBLE LOCATIONS
Often people in the armed forces are posted at locations where they could expect to get almost no advice from an experienced financial advisor. What they can expect, at best, is the presence of one or two insurance advisor who, most probably is not registered under the Sebi rules to give financial advice. In such locations access to financial information also remains a challenge.
TRANSFER AT REGULAR INTERVALS
Most Army and Air Force personnel are transferred at regular intervals, in about every two-three years, which may emerge to be a hurdle for continuing the relationship with a financial planner for the long term. With financial planners and advisors adopting to emerging technologies, this impediment is slowly being addressed. However, people posted at remote locations still face the same issue. In a way, those with the Indian Navy are better off compared to those in the Army and Air Force since they are transferred more infrequently. But transfers pose some challenge for them too, mainly in terms of review of portfolio and financial plan, and also rebalancing.
RIGOURS OF THE JOB
A job in the forces requires high level of concentration, dedication and discipline. The rigours of the job is more for those who are young. As they get busy with their job, they tend to push financial planning as a not-so-important task, while the practicality requires that they should start the same at a young age. Other issues discussed above also come in their way to which relegate the task of financial planning for later part of their life.
CONSIDERABLY HIGHER RISKS DURING EMPLOYMENT
People in the armed forces carry much higher risks to their lives than people in civilian jobs. This is one of the reasons why a large number of people in the forces tend to choose safer, but low yielding, investment options like provident fund, fixed deposits and other small savings instruments. In addition to pay low rate of return, these products are also not always tax efficient. While a part of their investments could be parked in these investments, but given the benefits they get from the government, they should have a large portion of their investments in investments like equity mutual funds or direct equity.
LACK OF FINANCIAL KNOWLEDGE AMONG PEOPLE FROM THE FORCES
Often discussions relating to personal finance among the officers in the forces is not taken to be in good taste and hence not many people prefer to discuss or seek advice on the same topic. This, however, is changing slowly with financial planners dedicated to people from armed forces are increasingly educating them about the same topic.
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