Smart money moves in time for the New Financial Year 2022-23
Haven’t executed your New Year Resolutions made on 1st Jan yet? No issues. Financial Year is about to begin from April 1 onwards. You still have time to start, in time for another ‘auspicious’ financial day!
In fact why to wait till April 1 too? जब जागो, तभी सवेरा 😊
Plan well and execute well from today onwards only. Here are some smart moves that you can take to give a new direction to your financial life and make it truly stress-free.
Here come easy 8 financial To-Dos for Financial Year 2022-23:
1. Update your Nominees: First things first. Please update your nominee details with immediate effect in all your existing investments – Bank Accounts, FDs, Mutual Funds, Equity Shares, Post Office Schemes, Insurance and whatever else you can think of.
2. Look at your health coverage: Fortunately, it’s not a headache for Indian armed forces personnel as they and their family members are well covered by the Govt all through their lives. But if your children are serving in the corporate world, then they must take their own health insurance policy and a critical illness policy too. A corporate employee should not stay dependent upon their employer’s health insurance policy only.
3. Term Life Insurance: Our lives are exposed to uncertainty. We must ensure that this uncertainty should not make our critical life goals – children’s education, children’s marriage, house etc – uncertain. LIC has a very good tagline ‘जिंदगी के साथ भी, जिंदगी के बाद भी’ but do get a reality check of insurance cover that an insurance agent is offering you. LIC and similar other policies offered by other service providers too. Most of such policies are mixed products, insurance + investments, which are not suitable to anybody at all except the insurance company and the agent selling it. Pure ‘Term Plan’ is the only policy to take. If in doubt, consult an ethical financial planning for the right advice.
A general thumb rule is:
Insurance Cover Required = (7-10 times X Annual Income) + (Loans, Liabilities, Responsibilities & Obligations balance)
If you wish to be doubly sure, get an Assets, Liabilities and Net Worth Analysis done by a competent financial advisor to know a more exact idea of the correct insurance cover required by you.
4. Hedge your portfolio against downturn: Diversify your investments to the right extent. Too much of diversification is as bad as too less.
Why diversify? Take an example – when equity markets perform well, gold value goes down and vice versa. Same way, real estate, interest cycles which impact FD and PF returns, Silver, Oil, grains, international equity – they all have their own cycles, correlations and ups-and-downs. Nobody knows in advance exactly what will perform when. When you are adequately diversified, you shield yourself from poor performance of a few investment avenues while taking advantage of some avenues which perform during that time.
5. Take risks for your long-term requirements: Blind investments with no goals/objectives will always fluctuate your blood pressure along with market fluctuations. Mental peace is the first casualty in such investments. Bifurcate your short term and long term goals and invest accordingly. While one should play safe with short term goals, calculated risk for long term goals is the need of the hour lest the termite named ‘inflation’ eat up your corpus surreptitiously and you not able to achieve your life goals.
6. Review your portfolio: Just like an annual health check-up, and car/AC service, your investment portfolio also needs a regular check-up. If you have not reviewed your investment portfolio in the last one year, it’s the right time to do it. It will help you to get rid of the weeds from your portfolio.
7. Write your will: Will is somethings which gives you complete control over who receives your assets, and how much, after you’re gone. Will ensures that there is no dispute and relationships remains good within the family as earlier.
8. Don’t get tempted by bitcoin-type frenzies: Everyone is tempted with prospects of instant painless wealth, and tend to ignore the downsides and dark alleys of investing. There are two clear-cut golden rules to go by:
If it is too good to be true, it is certainly not true.
If you do not understand it at least 90%, stay away from it.
Follow the above two rules to the hilt, and you’re on the way to good wealth creation.
Hope that these Eight financial moves would help to make your money grow and help you live happily ever after..!!
(Contributed by Priya Goel, Associate Financial Planner, Team Sukhoi, Hum Fauji Initiatives)