1. Calculate RoI for the last year
Most people have no clue about how their portfolio is actually performing year on year. When I ask the so called 'financial wizards', they start talking about returns on real estate or stocks or mutual funds, as if Fixed Deposits, Recurring Deposits, Employee Provident Fund, Public Provident Fund etc were not a part of their portfolio.
If you have had a chance to seek financial freedom advise from us, I am sure you would be tracking your entire portfolio, and not just a part of it. But even if you have not started tracking your portfolio, no problems. It is never too late, and it is not difficult. Just go to the Freedom Portal, login and download the Step 2 Template for Assets from the 'Dive in the book' section. Just fill in the current value of your assets and get going with your portfolio tracking. You should be able to find out what returns you are getting on your overall portfolio and how you can tweak your portfolio to balance it for risks and rewards.
If you have had a chance to seek financial freedom advise from us, I am sure you would be tracking your entire portfolio, and not just a part of it. But even if you have not started tracking your portfolio, no problems. It is never too late, and it is not difficult. Just go to the Freedom Portal, login and download the Step 2 Template for Assets from the 'Dive in the book' section. Just fill in the current value of your assets and get going with your portfolio tracking. You should be able to find out what returns you are getting on your overall portfolio and how you can tweak your portfolio to balance it for risks and rewards.
Knowing RoI on your portfolio is a critical input for financial freedom planning and wealth generation.
2. Monitor Inflation Data
Understand what average inflation has been going on for the last 10 years. This is critical to make assumptions for your future expenses and calculating future value of money. Look at some of the inflation figures by clicking here. Make sure that you take a rolling average of inflation and adjust your financial plan and financial journey every year. A 2-3% variation in inflation can have a drastic impact on your wealth calculation.
3. Claim your Leave Travel Allowance (LTA)
When was the last time you claimed your LTA? 2014-2017 is the current block of 4 years wherein you can claim the LTA twice. If you missed out in 2014, dont miss it this year. Give your family the break they deserve, and save taxes as well. Read more about LTA / LTC claims and other rules by clicking here.
4. Re-balance your portfolio
If, over the last year, because of the bull run in the equity market, your stocks + mutual funds (equity component of your portfolio) has over shot the prescribed thumb rules for investment, you may want to re-balance your portfolio by moving some of the money from equity towards the debt portion. Read more about understanding the portfolio here.
5. Re-validate your Life Insurance needs
Most people get their life insurance done once and seem to believe that they are done for their life. Even more feel that life insurance is an investment and expect it to give decent returns apart from covering for risk.
Life Insurance is a risk cover and should never be mixed with investment. Also, life insurance needs change with your changing financial profile, passive income, standard of living, liabilities, assets and so on. Get a financial planner re-assess your life insurance needs and bridge the gaps, if any. If there is any confusion, feel free to write to us.
Life Insurance is a risk cover and should never be mixed with investment. Also, life insurance needs change with your changing financial profile, passive income, standard of living, liabilities, assets and so on. Get a financial planner re-assess your life insurance needs and bridge the gaps, if any. If there is any confusion, feel free to write to us.
6. Re-validate your health insurance needs
Health insurance needs also change with age, lifestyle, medical inflation and so many other environmental factors around you. Get a financial planner to re-assess your health insurance needs and bridge the gaps, if any. If there is any confusion, feel free to write to us.
7. Start investing in Section 80C right now
Most often, we invest and save for saving taxes. While we must get smarter in saving taxes, investments should not be driven primarily by tax savings. The best way to counter this psychological human behaviour is to save taxes at the beginning of the year rather than leave it for the last minute rush at the end of the financial year.
Section 80C has the biggest bucket (after home loan interest) available for tax savings. So, whether it is PPF, EPF, SSY, NPS or any other investment tools, get going from this month itself.
Section 80C has the biggest bucket (after home loan interest) available for tax savings. So, whether it is PPF, EPF, SSY, NPS or any other investment tools, get going from this month itself.
8. Submit Form 15G / 15H, if applicable
Only if you are applicable, do remember to submit Form 15G / 15H. Every year, you need to resubmit this form to your bank so that they do not deduct your TDS. For applicability and other rules, click here.
9. Check applicability for Sukanya Smridhi Yojana
This (SSY) was a new scheme launched in this financial year specifically for the girl child. It is said to be better than PPF. Check the eligibility for your girl child, if applicable and take a decision whether you want to invest in this. To understand the merits and demerits of this scheme and for a comparison with PPF, click here.
10. Decide on NPS investments
This (SSY) was a new scheme launched in this financial year specifically for the girl child. It is said to be better than PPF. Check the eligibility for your girl child, if applicable and take a decision whether you want to invest in this. To understand the merits and demerits of this scheme and for a comparison with PPF, click here.
10. Decide on NPS investments
With the Budget 2015 proposals, investing in NPS has become more lucrative. It offers additional tax savings over and above the limits posed by Section 80C. But again, investments done just for the purpose of saving taxes often prove themselves to be a liability in the long run. Read a comprehensive article on NPS investments by clicking here before taking a decision.
The book "From the Rat Race to Financial Freedom" takes you through all possible investment options to enrich your financial freedom journey.
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Cheers
Manoj Arora
Freedom can buy you.... what money cannot !!
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