Active Duty Military Can Earn a Guaranteed 10% Return

by Hank

A “guaranteed 10% return” should usually tip you off to an investment scam. But, one of the very few legitimate opportunities to get such an impressive return is the military’s Savings Deposit Program. Eligible members of the military can deposit up to $10,000 and earn a guaranteed 10% APY on that money.

Who Qualifies for the Savings Deposit Program?

The SDP is administered by the Defense Finance and Accounting Service (DFAS), and it’s available to all soldiers, sailors, airmen, and marines who are stationed in a combat zone, hazardous duty area, or a few other qualifying locations around the world. Service members become eligible for the program after thirty consecutive days of deployment or one day of combat duty per month for three consecutive months. You must be receiving Hostile Fire Pay, and of course you need to make your way through plenty of military paperwork to set up your account and automatic deposits.

A Few Drawbacks

Like all good investment opportunities, the details are in the fine print. While this isn’t one of those deals that sound too good to be true, the Savings Deposit Program does have a few minor drawbacks.

  • Although federal income earned in a combat zone is tax-free, the interest you accrue is taxable. The government will take a bite out of the extra 10% you’re earning.
  • You can leave funds in an SDP account indefinitely, but the account will stop accruing interest 90 days after returning from a combat area.
  • Members of the military can only close accounts and access the money after leaving the combat zone.

How to Participate

Program participants can contribute to the Saving Deposit Program by allotment, check, or cash at the military finance office in the combat zone or location of deployment. Participants face limitations, however, specifically a cap on deposits. If you’re a service member in a hazardous duty area, you can’t just move funds from other accounts into the SDP to earn interest at the better rate. Your monthly deposits may not exceed your total amount of pay and allowances for that month. As a result, it might take a few months to accumulate the $10,000 investment needed to earn a full $1,000 in interest. Keep in mind you can only make deposits in $5 increments.

Remember, if you’re contributing through the SDP, you won’t be able to withdraw any of the funds in your account until you return home. A few hardship exceptions may allow you to make emergency withdrawals, particularly for critical medical issues in your family. You can leave the money in your account for as long as you want, but you’ll only earn the 10% interest for the first 90 days after you’re redeployed from the combat zone. While those three months of additional interest can add up to several hundreds of dollars, most service members need to remember to move the funds to a new account once those 90 days are up.

Final Word On The Savings Deposit Program

No investment program is perfect. But the SDP’s 10% guaranteed rate of return is attractive, especially in today’s market. It’s an excellent opportunity for all members of the military in a combat zone, despite the restrictions and a little bit of hassle. Though the rules can tighten service members’ budgets a bit, it’s worth dealing with the limitations to get that guaranteed 10% return. Consider your options as you decide how to make your investment decision.

Have you participated in the military’s Savings Deposit Program? What challenges have you faced, or did you get through to the maximum deposit and 10% interest with ease?

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