You must do a small exercise at the beginning of the financial year so that the rest of the year is stress-free. This exercise also helps you in understanding where you stand today and the steps you need to take to attain success on the financial front. It is imperative to do this exercise because your personal finances can be managed in a better way and you are sorted for the rest of the year.
In this blog, we will list a few essential things that should form a part of your new financial year strategy and what you can do differently this year so that you can achieve your financial goals with ease.
1. Review your Goals
The beginning of the financial year is a good time to review your goals as it gives you an insight about your financial performance last year and what can be done in the present year to improve the performance of your goals. You can also review the progress of your goals and check where you stand. For e.g.- if you were planning to buy a property in 2022-23, it may be possible that the real estate prices shoot up and you may want to shift your goal to another year. It may also be possible that the upward trend continues for the coming few years. In that case, you could decide to buy the property in the present financial year only.
Thus, reviewing your goals is the first and the most vital step that many people fail to do. Additionally, if there is a big change in your life in the previous year, you might have to rework the priority, change your goals or add new goals.
2. Create a Financial Plan to invest
If you are serious about creating wealth over the long run, you must not only create a basic financial plan instead, you must create a financial plan to invest so that you can put your money to work for you. Investing is a long-term activity; thus, you must have a set of well-defined objectives and think about the purpose of your investment. It is important to have a basic understanding of any investment you put your money into, e.g.- stocks, mutual funds, debt instruments, real estate etc. This exercise will give you confidence to invest smartly and reap the benefits of well-planned investment.
3. Start your Tax Planning
Many people fail to do their tax planning at the start of the year and are left puzzled towards the end of the year. The commencement of the financial year is the right time to start your tax planning because one must plan taxes before it is too late. Moreover, if you plan your taxes in the beginning of the year, you will invest your money systematically over a period of time rather than one time lumpsum investment that happens at the end of the year.
Also, planning early in the year will help you plan and invest in right instruments. Thus, if you are planning to invest in ELSS Mutual Funds, you can use an ELSS calculator to assess how your money will grow over a certain time period.
4. Rebalance your Portfolio
It is a fact that investors who rebalance their portfolio from time to time get the best returns. Thus, re-balancing your portfolio is one of the most essential things you must consider doing in this financial year. You may want to see how much percentage of funds you want to allocate towards equities, debt, gold, real estate, or any other investment avenue.
5. Review your Life Insurance Needs
Your responsibilities may increase significantly over a period of time. Thus, you must ensure that your life cover is sufficient to cover all your responsibilities. Hence, you must calculate and invest in the policies that are right for you and increase the amount, if required, so that you can cover the additional responsibilities. Your cover should be enough to meet the needs of your dependents, settle your loans and also save for future expenses like your children’s education.
6. Increase your Monthly Investment Amount
Ideally, your SIP amount should increase proportionately with a rise in your income. This can help you in reaching your financial goals faster. Moreover, you can also look at other investment avenues like the National Pension System (NPS), Public Provident Fund, National Savings Certificates (NCS) etc.
Taking the aforesaid steps will enable you to improve your finances and ensure a smooth financial journey in the new financial year. mastertrust can help you in doing things differently this financial year and assist you in opening an online demat account, share trading account and facilitate investment in the stock markets to achieve your goals.
We, at mastertrust, understand that financial markets can get complex for you and it is easy to be confused about where to put your money. Contact us for the right set of tools, guidance and knowledge.