“Financial planning isn’t all about good advice or returns on your investment. It’s about providing advice you can trust.”
It is always beneficial to plan ahead and have a plan for your future finances ready. You certainly don’t want to make the same financial mistake you made earlier. It is also important to plan your investments well.
Budget 2018 was recently announced and while there is no change in personal income tax, long-term capital gains will be taxed at 10% for an amount greater than Rs. 1 Lakh, without indexation.
So how do you plan for 2018 to make it financially viable?
To make your 2018 financial year a great HIT, here are 10 financial moves you can take:
1.) Participate in a temporary plan or insurance
Life has its own course of operation. You can never be aware of what is going to happen next. It’s unpredictable, so it’s important to plan ahead.
Invest in a term plan to secure your family’s future. The term plan or term insurance is financial protection that helps your family financially while you are away. Term insurance is becoming more and more popular because it has many advantages.
2.) Have health insurance
Health is wealth and there is no denying this fact.
Whether you have family or lead an independent life, investing in a health plan should be your top priority. Accidents and ailments are not uncommon, and the sad part is that medical treatment is not cheap in our country.
Having health insurance helps you overcome sudden medical emergencies.
3.) Invest in systematic investment plans (SIP)
It is one of the easiest and most convenient ways to invest money in mutual funds. You have the freedom to risk your money weekly, monthly or quarterly. Systematic investment plans give you an already decided amount to pay evenly on regular terms. This type of investment in mutual funds is considered to be the safest and most suitable type in the market.
4.) Buying real estate
After the implementation of the Goods and Services Tax (GST) in 2017, real estate investors were not very sure about their financial security. However, the situation is likely to change in 2018. It appears that the government is looking for new ways to jumpstart growth in the real estate sector.
With the Real Estate Regulatory Authority (RERA) law in place, there is no more room for false promises from real estate developers. You also probably won’t have to deal with cheating or being behind in possessions. In addition, rates are low across the country. Due to good market conditions, this may be a good time to buy a home or commercial property. But, be sure to take advantage of the benefits of a home loan while making this expensive transaction. Instead of paying the full cost in cash, use a home loan to pay a portion of the full cost and save on taxes. What better time to invest in real estate than now?
5.) Evergreen fixed deposits
This is a financial mechanism provided by banks where investors receive a high interest rate varying from 4 to 6.5% compared to normal savings. Here your money is deposited in a fixed deposit account for a certain period without and you cannot withdraw it before it expires. Maturities can vary from one week to 7 years depending on the investor. And since your money is locked in, you have no choice but to save money. A loan on your fixed deposit is available, which you can opt for in an emergency.
6.) Tax savings investments
Balance your portfolio well and keep an eye out for tax saving instruments, while investing in 2018. You are entitled to a tax deduction of up to Rs. 1.5 lakh under section 80 (C ) of the Income Tax Act. Make sure you use it with care.
In the case of the traditional debt tax savings instrument, yields have declined in recent months. Invest in options like ELSS to maximize your return on investment.
PPF is another option that you have. Although the interest rate has fallen recently, your money is safe here.
In addition to that, use Personal loan for expenses like the education of the child, home renovation. This will help you claim a tax benefit under section 80 (C).
7.) Invest in balanced and liquid funds
Mutual funds and liquid funds offer moderate returns, are tax efficient, and will keep your hard-earned money safe. The percentage of these should make up your portfolio is entirely up to you.
8.) Have an adequate budget in place
Having an adequate budget in place and sticking to it is crucial.
Did you have a budget for 2017? If not, it’s time to get one. And if you already have one, make sure it doesn’t have the same flaws as the previous one.
Each person should have a budget regardless of the money they earn. Keeping a constructive budget helps you track your spending. It will also help you keep tabs on your savings and plan your finances well.
9.) Estimate your monthly expenses
Keep track of your monthly expenses to know where your money is being spent. Spend time going through your expenses and cut down on unnecessary expenses. This will help you build up your savings in the future.
10.) Maintain a good credit rating
An acceptable credit score helps you acquire greater purchasing power which will help you fulfill your dreams of buying a home or financing your child’s education. Always check your credit score.