10 Essential Things To Do In The New Financial
Year 2015-16..!
The start of the new financial year 2015-16 is a good time to review your investments and
assess where you stand. It is also a time to reassess your insurance needs and
kick off your tax planning.
Here are Ten essential steps that an investor
should take right now. If taken in April, these Ten steps will ensure that the
rest of the year goes off smoothly.
1. Re-balance the Portfolio..!
The most important step is re-balancing of the
portfolio. You may have started the year with a 60% allocation to equities, 30%
to debt and 10% to gold.
But, equities shot up 30% to 40% in 2014-15,
while debt went up by 9% and gold fell by 5%. So, your portfolio is now 65% in
equities, 26% in debt & 9.5% in gold.
To return to the allocation preferred by you,
sell some of your equity investments and invest the proceeds in debt and
gold.It is a fact that investors who periodically rebalance their portfolios
get the best returns.
2. Review Progress of Goals..!
Along with rebalancing, you also need to review
your financial goals. If some investments have not done as well as estimated,
there would be a shortfall in the target amount set for that goal.
You need to make additional investments to cover
that gap. In some cases, the target itself may have moved up.
For instance, if the surge in the dollar has
pushed up the cost of your child's foreign education, you need to increase the
investment for that goal.
3. Junk Laggard Funds, Overvalued Stocks..!
While reviewing your investments, you must also
weed out underperformers from your portfo lio. Boot out mutual funds that have
consistently fallen behind their benchmarks for the past 3 to 4 quarters.
Even stocks that have run up quite a bit in
recent months and are now trading at very high valuations should be thrown out.
This will reduce the risk in the portfolio.
4. Take stock of life insurance needs..!
You life insurance needs keep growing. A spouse
quitting her job or the birth of a child would increase your responsibilities
and require you to buy more life cover.
One may have also taken a big-ticket housing loan
or / car loan. Remember, the cover should be big enough to provide a monthly
income to your family, settle all outstanding loans and keep enough for future
onetime expenses like education and marriage of children.
Assess your insurance needs & buy additional
insurance if required.
5. Review Health Insurance Policy..!
Like life insurance, you should also reassess you
health insurance needs. Given the high cost of health care and the exclusion
clauses in most policies, a cover Rs. 3 lakh is no longer enough.of .
Rs. 5 lakh for Buy a cover of at least .your
family. Also, assess whether there are better products in the market. If your
policy is not good enough, switch to a new insurer.
6. Start Your Tax Planning..!
Most people crunch their tax planning in the past
2 months of the financial year.
Instead of waiting till March, start investing in
tax-saving options from April itself. This is especially important if you want
to invest in ELSS funds.
Starting in April will allow you to diversify the risk
across time instead of putting in a lump sum at the end of the year.
7. Open an NPS account & Sukanya account if
eligible
The additional Rs. 50,000 deduction for
investments in the National Pension System (NPS) under Sec 80CCD (1B) is a good
opportunity to cut tax. Open an NPS account to benefit from this.
If you have a daughter below 11 years, open a
Sukanya Samriddhi Yojana account for her. At 9.2%, it offers higher returns
than the PPF.
8. Submit Form 15G or / 15H if Eligible..!
The government has changed TDS rules and even
recurring deposits will now be subject to tax deduction at source.
If you are not in the taxable bracket, submit the
form 15G or / 15H to avoid TDS on your investments.
However, make sure you are eligible to submit
these forms. Incorrect declarations amount to tax evasion and can invite stiff
penalties from the tax department.
9. Check your Form 26AS and Tally Your TDS
Credit..!
The tax filing season is about to begin. While
the tax deducted by your employer will reflect in the Form 16, check out your
Form 26AS online to make sure that all other taxes (advance tax, TDS on
investments and other direct taxes) have been rightfully credited to your PAN.
If there is a discrepancy, notify the deductor
immediately and get it rectified before the tax filing season starts.
10. Open an Account With MF Utility..!
Direct mutual funds (MFs) give higher returns
because they charge less.But one has to invest directly to the mutual fund and
if you are investing in 3-4 different fund houses, this can be challenging.One
has to keep a record of different login IDs and passwords of 3 to 4 different
websites.
The MF Utility platform launched recently does
away with this problem by providing a common investing platform for 25 fund houses.
Register today itself to start investing.
Src: ET, Mr. Sanjay Singh
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