WHAT DO YOU WANT TO ACHIEVE?
Set a Goal for the year first. This also depends on your long-term Goals. For example, if you have a Goal of making corpus of ` 10 lakh in three years, then you have to achieve a portion of that corpus in 2016. Quantifying your Goal is a must.
SET YOUR MINIMUM RETURN
Plan backwards. Once you have a Goal in sight, next check how much you can invest in the year. Depending on both these factors, you will know how much return you expect. Depending on your return expectations, you can select your investment options.
It is best to invest across assets and not just stick to one, depending on your return expectations. So, invest a portion of your money in Equity Funds and some in Debt Funds. Do in such a way that your average return meets your Goal.
Don’t make the mistake of investing all your money at one go. Save in bits every month. This way, you would not face a cash crunch and meet all your financial responsibilities. Systematic Investment Plans (SIP) can help you increase your returns in the long run.
Liquid FundS FOR EMERGENCY
You cannot have a financial plan in place without an Emergency Fund. Set aside a small amount every month for this purpose. Ideally, it should amount to three times your monthly salary. Invest this in Liquid Funds to earn better interests than
MONITOR AND REBALANCE
Plan to monitor your investments every month or quarter to see if you are on the right track. If your investments are not doing well and neither are they likely to, cut your losses, rebalance your portfolio, and reinvest your money
TAX PLANNINGAlways invest while keeping in mind your tax liabilities. There are many investments like ELSS schemes which can give you the dual benefit of Tax Savings as well as high returns.