Ten Essential Things To Do In The New Financial Year 2015-16..!

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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