|
Post by BeenThere...DoneThat... on Mar 10, 2011 11:32:30 GMT -5
...I was chatting with some military friends whose husbands are deploying, and I said that the 10% ROI for the SDP (while in combat) was a great way to go to lock in a rate of return... (none have other investments to vie for that combat pay.) ...but then someone else pointed out a Roth could be more ROI... ...thoughts?
|
|
|
Post by robbase on Mar 10, 2011 13:18:08 GMT -5
you need to look at the "risk" side of the equation as well. In the SDP there is ZERO risk for your principle and you are GUARANTEED 10% return. no other investment will give you anything close to that. Yes Phil will say the market will eventually revert to the mean and give you 12% or whatever, but even he will honestly say that is not GUARANTEED.
Due to the extreme low risk and guarantee of the SDP I think it would be foolish to pass it up
|
|
pammy831
Junior Member
Joined: Jan 4, 2011 19:44:06 GMT -5
Posts: 172
|
Post by pammy831 on Mar 10, 2011 13:22:47 GMT -5
My DH is in the military and in my opinion the only downfall to the SDP is that I believe you can only keep the money in that account for a year so you don't get to keep the guaranteed rate and the no risk for nearly long enough!!!
|
|
thinid
New Member
Joined: Jan 6, 2011 18:09:54 GMT -5
Posts: 41
|
Post by thinid on Mar 10, 2011 13:28:32 GMT -5
I can’t think of any other investment which guarantees a 10% annual return than the SDP. It has some limitations though:
1) Your initial contribution cannot exceed 2x your base pay. 2) You are not eligible to contribute until you have been “in country” for 30 days. 3) Interest is only earned on the first 10K. Anything above that is just sitting there. 4) You have up to 90 days after you return home to withdraw. Interest is still being earned until the end of those 90 days.
Interest is paid quarterly and depending on the timing, it is possible to earn interest 2.5% interest on 10K for 6 quarters, or $1,500.
SDP is really geared toward younger service members to encourage them to save instead of spend. However, many of the lower ranks find it difficult to come up with 10K and don’t get the full effect. For someone who knows about investing, there are certainly better options, but the SDP is a good start. The Thrift Savings Plan is also very good.
|
|
|
Post by robbase on Mar 10, 2011 13:28:51 GMT -5
you can keep it in there as long as the military member is deployed, and than must remove it 3 months after the member returns from deployment (it accrues interest for the 3 months)....a very good deal that most military don't take advantage of unfortunately
|
|
|
Post by robbase on Mar 10, 2011 13:32:38 GMT -5
"However, once your account reaches 10K, you do not earn interest on anything over that. Also, the maximum opening contribution is 2x your base pay."
And how many military members do you think will ever reach $10K? Also the maximum opening contribution is your last Net Pay amount (so much misinformation that people state as facts....)
|
|
thinid
New Member
Joined: Jan 6, 2011 18:09:54 GMT -5
Posts: 41
|
Post by thinid on Mar 10, 2011 14:37:45 GMT -5
Does it matter? 10% is still 10% regardless of if it's on $100 or $10,000 BUT, you cannot make a deposit until you have been there for 30 days. On your initial deposit you are allowed to deposit for the first month as well as your second month. And I mispoke; it's not base pay, it's unalloted pay and allowances. No need to be a snot. comptroller.defense.gov/fmr/07a/07aarch/07a_51.pdf
|
|
|
Post by robbase on Mar 10, 2011 15:21:38 GMT -5
Wow thanks for the personal attack and I see you modified your post to make it appear different than it first did (which is what I was responding to).
On your initital deposit you are not automatically allowed to deposit your first and second month of unallotted pay, EXCEPTIONs are permitted based on if you are in a remote site away from the finance office or whatever. But the main rule is last unallotted pay for the month is the limit--and why is this the normal rule- usually people enroll either by allotment (you can't set up an allotment for more than your unallotted pay) or check (and people can bounce checks, so DFAS does not really want a bounced check for more than a military members available pay (in case they need to do a colection))
I am familiar with the FMR Vol 7a, 7b & 5 ...I work with them every day...so I am hoping you can teach me something new... If I am wrong please cite to me where it says you can start the initial deposit with first and second month of pay
thanks sorry for being such a "snot"
|
|
❤ mollymouser ❤
Senior Associate
Sarcasm is my Superpower
Crazy Cat Lady
Joined: Dec 18, 2010 16:09:58 GMT -5
Posts: 12,857
Today's Mood: Gen X ... so I'm sarcastic and annoyed
Location: Central California
Favorite Drink: Diet Mountain Dew
|
Post by ❤ mollymouser ❤ on Mar 10, 2011 15:58:08 GMT -5
We've looked into the SDP, but since my wonderful DH does only "shorter" deployments (usually 3 months), we've found it not worth the hassle and paperwork. But for military members with longer deployments and cash to put in savings, it's a great deal.
|
|