Met a few defence personnel and asked them ‘what their financial challenges were’. Based on the maximum time spent on the topic, here is the list of problems. I am doing this post so that the people reading this can add their comments..and enrich this post!

  1. Not knowing where to turn for financial advice.
  2. Banks selling them completely unsuitable products, and people being saddled with it for long periods of time.
  3. Managing money during foreign deployment, during long stints in places with poor communication access.
  4. Regular transfers – making it very difficult to keep changing address – thus losing track of investing.
  5. Education not making them technology savvy enough to do all transactions online.
  6. A few of them losing money to phishing scams, and other E-based frauds.
  7. Losing money to many scams like plantation schemes, chit funds, etc.
  8. Banks getting them to open E brokerage accounts – leading to trading losses.
  9. Balancing the spouse’s career: there are many restrictions on the spouse’s career, and quick transfers mean that the spouse cannot really have a serious career. She/he can have only short term careers. So this mode of income is very small, if at all!
  10. Children’s education is just not affordable if they want a higher education in Arts, or want to go abroad.
  11. Children’s expectation in terms of their love for branded products, etc. – aspirations are beyond salary.
  12. Transitioning to a civilian life: there is help in terms of seats in good colleges, etc. but not many of them are academically inclined to study at age 35 to be able to take advantage of those offers…
  13. No legal protection against frauds – and their vulnerability of not being able to chase – again because of transfers..
  14. Not being able to find the right person to ask for managing their money…

please add your views / points in the comments section…

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  1. Dear Subra Sir,
    I can add a few more to this list:-
    1. The biggest challenge is to change the mind set of a fauji. He/she is still living in a world who thinks providend fund is the best investment, thinks EMI is the same as SIP, will listen to advisors on TV and invest in worthless stocks, will be more than willing to dabble in exotic products, and will liquidate funds as soon as they show a 10% return….so on and so forth.
    2. The virtue of patience and the wonders of compounding are very alien to this community
    3. I feel the aspect which is most wanting is proper education regarding all aspects of personal fin starting from setting of goals, taxation, inflation, time value etc etc.
    4. The list is endless…probably will be addressed in your forthcoming book.
    Happy to give an insider view

  2. Can’t really do any value addition to the post, but just a little anecdotal observation:

    Recently I’d gone to give a talk somewhere and after striking a conversation with one of the security personnel there, discovered he was ex-army.

    Although didn’t get enough time for a lengthier conversation, he was a little disappointed that the GOI offers no real support for folks like him that were denied any promotions and were asked to leave the services after having served for 18-20 yrs. He was trying to figure out ways to increase his income (sources). I suggested using his army background for fitness and self-defense training.

    The thing that I was disappointed with – army brain washes them to just take orders with no questions asked. There’s no sincere effort in ensuring a better personality development of their staff, I think. Guess the higher ranked officers do alright, the lower grade ones suffer the most.

  3. Subra, One of my colleagues was an ex-serviceman. He was from the Navy. One thing I observed in him was exceptional risk taking ability. He had divided the lumpsum benefits recd at the time of VRS (incl PF) into two, and invested one half in a plot of land and the other half into (mahindra) satyam just after the crash. These two investments have multiplied several times and have helped him complete all family commitments like higher education & marriage of his children, with ease. Guess there are some who are not only tech savvy but also willing to take risks in pursuit of reward. Though I have been investing for the last 12 years through SIP and delivery of select blue chips, I would never have done such investments.

  4. Arun what he did was pretty FOOLISH but got very Lucky. The odds were against him..if he had lost in Satyam…YOUR ans would have been different, right? actions have to be judged..without seeing the results. In 99% of such cases people would have lost money. HE GOT LUCKY, and luck is not strategy. Its luck!!

  5. looking forward to more comments – including those from other family members of the armed forces too…preferably from the Retired officers themselves…

  6. on the contrary defence personal are best placed to be the best investors:
    1. I am talking of the current serving lot,.retirees all your points are applicable.
    2. fauj only place where indexed pension still available.
    3. free life long benefits for medical till alive for self and spouse and children till there 25 years of age.
    4.canteen and cl;ub facilities.
    5. 100 percent job guarantee.all officers retire at 54 years and all of them get remployment of 4 years making retirement age 58 years.
    6.present lot is investing regularly in mf sips and i am talking of persons born after 1980 and not good old faujis.
    7.they invest in properties like 60 sq yd houses in appropriate places where rental yields are 6-7 percent after making them fully furnished.with income tax rebate they break even the first day itself.
    8.spouses are no longer accompanying them at all places.they live in seperated family station at metros. almost nil.
    10. things not as bad as made out to be.they leave at 20 yrs at age of 41 yrs.resettlement courses at iims.retirement pension and interest on lumpsum amount is almost equal to their salary minus seventh pay commission one officer will get approx 1 cr on retirement and 65000 as pension.
    11.yes for persons below officer rank things are difficult

  7. Subra Sir, What VK has said is correct. Point No. 12 is true only for Officers and not Jawans/ORs.

    Discussing Financial matters and investments are considered Taboo and people dont actually realise the importance till the time they are on the verge of retirement.

    For Point No 11, only parents are responsible nobody else. Upbringing can solve this problem, but again social conformity plays a role here.

  8. Had seen two fauji families who our neighbors at my home town. With corpus after 20 yrs service, constructed a home with self stay and rental income. Got a job as security officer at PSU bank. Had a trouble free life almost 20 years till their kids grown. Later point of time, their kids could not lead like their parents life.

  9. Alcoholism is a spoiler. Point no. 12 is relevant, they expect honesty and perfection in civil society. Some do not even know the benefits available and fail to fully capitalize. Those who take up second career in Government, Banks or corporate do well. There should be a counseling and coaching during service to facilitate to handle their better service life themselves.

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