Smart Financial Planning

Smart Financial Planning

As the year comes to an end, it is time to look at the mistakes that people make while investing and what kind of astute financial planning is needed for the next year to get a grip on lost time and money.

From SIPs to Real Estate, here are 4 Investment Resolutions for 2017. 

This year, 2016, comes to an end. It has been eventful to say the least. Before 2017 begins, let’s look at some of the money mistakes that most of us make or have made during this year while investing, and explore the kinds of effective financial planning required to come to grips with lost time and probably lost money, and resolve not to make the same mistakes through the brand new year just around the corner.

Life and Health Insurance

  1. Buying an Insurance with Life-Coverage is crucial; furthermore, it is critical to do so early in your life. A Life Insurance protects your family if you, as the breadwinner, suddenly die. One must therefore identify critical financial goals of life, such as marriage, children’s education, buying a home and retirement for an endowment Life Insurance Policy and plan your finances and insurance accordingly. Dharmendra Satapathy says that you should choose an Insurance Plan according to its monthly Premium, and the length of time that you would prefer to pay for those.
  2. Apart from Life Insurance, it is also very important to take on a comprehensive Family Health Insurance Policy. Doing so early on, when one is young, and consequently at one’s strongest and healthy is highly cost effective, as the Premium will be lower. A Family Health Insurance also provides tax-benefits of up to Rs. 25000 for the the Holder and his/her family under Section 80D. Additional cover for one’s parents can accrue further deductions.

Start Your SIP

  1. A Systematic Investment Plan’s function is to create wealth by the way of investing small sums of money every month over a long period of time. The greatest advantage that a SIP provides is that the investor has no need of timing the market. When an investor times the market, he or she usually loses out on the market rally or enters the market at a wrong time whence valuations have either peaked or the markets are on the verge of decline. Dharmendra Satapathy tells us that investing every month through a SIP ensures that one is invested during both highs and lows, and reaps benefits that are characteristics of both periods.
  2. Even more important is that SIPs provide the advantage of Compounding wealth. With a SIP, you must start investing as early as possible, and best of all, at a young age. This is because the longer the Investment Horizon, the greater the Benefits at the end of Investing Period. If you start your Investment Journey early especially with SIPs, then Equity Funds should constitute 80% of your Portfolio, as this particular asset is the best bet for growing your money over a long period of time. SIPs can be the ideal method of accumulating money for your Retirement. After your retirement, you can withdraw your money through a Systematic Withdrawal Plan.

For more, please feel free to call us or email us at NextLevelAmbition

Invest in Public Provident Fund

  1. The Public Provident Fund is one of the most popular and widely utilised Investment Option for individuals with Long Term Financial Goals. PPF Investments are Tax-Exempt through all stages. The current Rate of Interest is 8%. A Resident Indian can avail of the PPF; can open a PPF Account; the Subscriber can open another account even in a Minor’s name. The Maximum Investment Limit is RS. 1.5 Lacs by adding Balance in all accounts.
  2. Deposits made under PPF qualify for tax deductions from Income under Section 80C of the Income Tax Act, where the ceiling is RS. 1.5 Lacs per annum. A PPF Account matures after a period of 15 years, and can be renewed every 5 years thereafter. Non-Resident Indians, however, cannot open a new account, but can continue their existing accounts till Accounty MAturity, but without extensions.

Real Estate Investments

  1. Our advice to you is to never bet on Real Estate.
  2. Never, ever take a loan which is bigger than you can afford – having speculated on future possibilities. Remember, that your EMI should never be greater than 50% of your Income.
  3. Always take an Insurance Cover with your Home Loan. Do not le the loan become a burden unto your family in case something were to happen to you.
  4. And if you don’t plan on having a House Loan Cover, ensure that you have an appropriate Life Insurance Plan which will provide for EMIs and other borrowings in your absence .

Fore more advice and guidance, call us or email us.

Author: Anamitra Dasgupta AT NextLevelAmbition

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