Six Things To Do In The New Financial Year
As we come to the end of yet another fiscal year, it's time to take stock of your finances and take steps towards their betterment. Here are six important steps you can take to ensure a higher degree of 'fiscal fitness' in FY 2019.
SIP in an ELSS
Do you wait for the last moment to make your tax saving investments for the year in an ELSS fund? Many investors who did that this year were in for a rude shock, as Asset Management companies were closed on the last three days of March. This year, put your ELSS investment in autopilot by starting a SIP (Systematic Investment Plan) in April itself. Not only will you be reducing the risks associated with equity investing; you'll also make it a lot easier on your pocket.
Re-evaluate your Health Insurance Coverage
Burgeoning healthcare costs have made it imperative to have adequate Health Insurance coverage. While most people rely on their company provided medical coverages, 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 eat into your savings.
Protect your 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% and buy a simple term insurance plan to cover your life for this amount.
Evaluate your Traditional Life Insurance policies
We routinely come across investors who have unwittingly purchased one (or several!) low yielding traditional insurance plans that were hard-sold to them by agents under the guide of being 'good investments'. 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.
Rebalance your Portfolio
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. What's more - their miserly expense ratios will work in your favour too.
