Six Money Things To Do In FY ‘23

As we come to the end of a turbulent and volatile financial year, it’s time to take stock of your finances and take steps towards their betterment. Here are six important steps that will greatly improve your financial health in FY ’23.

Re-evaluate your Medical Cover

The brutal Delta wave of the pandemic came as a rude shock to many families that lacked adequate Health Insurance coverage. While most people rely on their company provided mediclaims, these plans often have terms and conditions attached to them that make them less effective than purchasing standalone policies for yourself. Taking up a comprehensive medical insurance plan with a floating cover that amounts to at least 2.5 Lakhs per family member, will ensure that health-related emergencies do not affect your goal-based savings.

Put your 80C on Auto Pilot

Do you wait for the last moment to make your tax saving investments for the year in an ELSS fund? This can prove to be a costly mistake if you end up investing at the tail end of a bullish cycle, or geopolitical events such as the Ukraine war that we’re witnessing right now bring down markets. This year, put your ELSS investment in autopilot by starting a SIP (Systematic Investment Plan) from April ’22 itself. Not only will you be reducing the risks associated with equity investing; you’ll also make it a lot easier on your pocket.

Safeguard your important goals

While planning for your goals by saving for them systematically is important, it’s equally critical for you to protect them. Typically, you should be protecting three goals – your children’s education and their marriage, and half your retirement corpus if you have a dependent spouse. Discount the future value of your goal amount by a reasonable rate of say 10 per cent and buy a simple term insurance plan to cover your life for this amount.

Critically evaluate your “traditional plans”

Are you one of the unfortunate many who get “sold” a traditional policy in the frenzied sales push of JFM (January, February, March)? This fiscal, take a long hard look at them and actually decide whether you should be continuing them or not. Barring a few situations where you’re very near the completion of your policy, it typically makes a lot of sense to either surrender these plans and invest the proceeds aggressively, or to make these policies paid up. 

Review your Investments

While passivity can be said to be a strength when it comes to investing, its important to not lean so far towards inaction that your portfolio becomes unwieldy and unaligned with macros and fundamentals. Start the fiscal year by rebalancing your portfolio between fixed income and equity assets. Given the state of the markets right now, it would make sense for even aggressive investors to step off the pedal a bit when it comes to equities, for the next year or two. 

Start an NPS account

Looking for investing in a tax saving instrument, but without investing into equities at this stage? Open an NPS account. NPS investments qualify for an incremental deduction of up to Rs. 50,000 under Section 80CCD(1b), and their debt funds (C and G, standing for Corporate Bond and Government Bond respectively), have actually fared quite well in comparison with even mutual funds. Though their equity fund performances have not quite been top notch, they are definitely a better option for retirement planning compared to traditional avenues that do not even beat inflation.