The new year for our investments is not on 1st of January. It is on 01 April, the fool’s day, and this is the day when all financial resolutions need to be discussed, written and planned to be honoured. Here are the top key financial decisions that must be done in the first week of April to ensure that you have a successful financial planning journey.
Make a simple spreadsheet with your income and expenses
A simple spreadsheet can do wonders. Filling and maintaining one needs patience and discipline. If this is done systematically, you will never ever need a financial planner! While there are many apps that exist in the markets, the biggest problem is that many of the apps are not able to extract all the information. That is simply because many of us get a salary in a bank, spend using different credit cards or cash or wallet apps. If not a spreadsheet, even a dairy (the paper one) will do. Numbers noted will reveal where the leakage areas are.
Invest in PPF
As a SEBI RIA, I get feedback as why am I pushing for PPF and Sukhanya Srmudhi schemes when customer can invest that amount in a liquid fund to get more returns. Public Provident Fund, PPF, is one of the safest products that you can ever invest in. This is the one product for the Gen Millennium for whom retirement is never a thought. 15 years is too small a time frame, and time will just fly by and you will be one day looking at even extending your PPF account.
If you have not opened a PPF account yet, then you can now open the account online, if you have an account with a Nationalised bank or even with large private players like ICICI Bank and HDFC Bank. If your PPF account is about to mature, ie 15 years since you opened the account, make sure that you extend the PPF account at least two months prior to the maturity by filling up the form H. Unfortunately, most the extension of PPF account are an offline route by going to the bank and filling up the form. The form is a simple one. Ensure that you extend your PPF, or else you will not be earning the interest collected over the last 15 years of patient investment.
Alternatively, you can also go to a bank and open the form in the old fashioned way.
Remember to invest at least Rs 50,000 to Rs 1,50,000 (the limit as of FY 19-20). While PPF has a minimum of Rs 500 per financial year, you can only make good returns if you invest a large sum. If you can afford do invest the maximum available amount in PPF for any financial year. The best part of PPF comes towards the end of the tenure and after 10 years of investment and with 8% return, you can expect to see a lakh or so added only by Interest! Remember that PPF is entirely tax free.
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Plan to buy term life policy is not done before
Life insurance is often missold in India – with ULIPs and money back policies being an agents product, Term Life Insurance has often been neglected by many. However, with increased media coverage and online learning tutorials, Term Life Insurance is becoming a popular product. Term Life insurance is a pure insurance product – meaning you never get the benefit, but your family or dependents will get. Term Life insurance is the cheapest insurance in terms of Premium, where you don’t get any returns, and the only benefit is death benefit. These days term insurance has been bundled with several ‘riders’ – ie additional insurance coverage such as disability benefit, accidental riders and even medical insurance! However, our advise is to take term insurance without much riders – perhaps the only additional rider you can think of is a disability rider. Connect with a SEBI Registered Investment Advsior for knowing what is best for you.
Plan to buy Health insurance top-up plan if not done before
Your company may cover you well for any medical emergency you may encounter, however, it is always advisable to have a personal health insurance plan. This is because with vast majority of today’s employment is in private industry, and with India becoming more American in nature (yes including spelling color instead of colour), the day is not far when ‘pink slips’ be handed out and employment will not be continuous. Even if not a standard health insurance product, a top-up health insurance is a must for anyone. A top-up health insurance take care of expenses above a particular amount and are often having cheaper premiums.
Continue or Start SIPs
Election or no election, Indian markets will always have some drama or the other that will rock the stock markets. You must start or continue your SIPs and not stop them just because the Sensex falls by a few points.
Bhoi Smrutirekha Dharanidhar