New year 2020: Top 5 money tips to look at in your investment portfolio
Money Tips: If you haven’t tried to save money from the taxman for the financial year 2019-2020, then know that you shouldn't delay it any further. Utilize the tax exemption limit under Section 80C to reduce your tax outgo.
New year 2020 is about to arrive and people are busy giving farewell to the year 2019. However, after saying goodbye to the current year and a warm welcome to the New year 2020, one needs to look at one's investment portfolio. According to experts, the beginning of new year is the best time to scrutinize one's investment failures too. So, review of the portfolio, planning of taxes, etc. requires proper attention when a new year begins.
Speaking on the matter Harsh Jain, Co-founder, and COO, Groww said, "As 2019 nears an end it is time to re-assess your financial health as well as plan ahead for the future. Year-end financial planning is the stepping stone to creating a solid financial plan for the next year, that is congruent with your long term goals. It is also a good time to finish any incomplete financial obligations so that you step into 2020 with zero backlogs and 100% zeal! Here are a few points to consider."
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Asked about the top 5 points to look at in one's portfolio at the beginning of the new year Jain listed out the following:
1] Time To Review Your Portfolio: A periodic review of your investment portfolio should be done to ensure you achieve your financial goals on time and year-end is a good time for this. See whether the overall returns of your portfolio were according to your expectations or not. You also need to relook the performance of individual funds. If you feel some funds have been consistently underperforming you can stop your ongoing SIP in them direct your money to better performing funds in the same category. Overall, ensure the asset allocation between debt and equity is as per your financial goals, you can add liquid funds to your portfolio if you feel it is overexposed to equity to balance it out as well.
2] Plan Your Taxes: If you haven’t saved taxes for the financial year 2019-2020, you shouldn't delay it any further. Utilize the tax exemption limit under Section 80C to reduce your tax outgo. Look for avenues that serve the dual purpose of wealth creation as well as tax saving such as ELSS mutual funds. You can invest in ELSS a lump sum amount or go via the SIP for this purpose. Also, keep a tax-saving plan ready for the next year so that you don't put your money in avenues that don’t align with your financial objectives.
3] Tackle existing loans and debts: It's good to enter the new year with the minimal backlog in terms of loans and debt. Arrange the loans in accordance with the interest rate they attract. For instance, clear off any existing credit card loans and then move onto bigger loans like car loans, home loans, etc. Accordingly, make provisions of dealing with them in the financial plan for next year.
4] Increase your contribution to ongoing investments: Any year-end or festival bonus that you may have received can be used for the purpose of bumping up your existing investments. You can focus on high priority long term goals such as retirement and proportionally increase your investment in them. While calculating the amount by which you should increase your contribution to the existing investments, factor in inflation as well as the increment you may get next year. So if currently 30% of your income is directed towards investing in your long term goals, you can bump it by 35 or 40% as the case may be.
5] Buy Health and Term Insurance: Buy insurance policies be it term insurance or health insurance with optimal cover for financial protection against unforeseen circumstances. Insurance with adequate cover will also ensure your other long term financial goals are on track and you don’t have to dip into your investments to meet expenses. Always go for pure insurance schemes rather than products that offer you investment plus insurance options.
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