At the beginning of every new year, we tend to promise ourselves to accomplish a handful of goals by the time the year ends. A lot of time we end the year a satisfied person, having achieved at least a majority of the goals. At times, however, we fall short in meeting those targets and sometimes we may even fall short miserably. However, even if you fall short, never stop having a handful of practical and achievable New Year resolutions.
As we start a new financial year, below are a set of financial resolutions from two experienced financial planners which any investor can adopt. If you are able to meet some of these targets - "after meeting a few challenges of daily life and some human emotions which may make us lose track of these resolutions," as Naresh Pachisia, MD, SKP Securities puts it, you are most likely to have a satisfying year as an investor. According to Mukund Seshadri, co-founder, MS Ventures Financial Planners, "use apps and available technology to keep track of your expenses because slowly but surely expenses are emerging to be the backbone of financial planning.”
RESOLUTIONS FOR THE NEW FISCAL
Needs vs Wants: There are things which you and your family may want but they may not be needed for the family. Identify at least three items of avoidable expenses in your family, which you want but do not need. This will help you to save and invest more.
Set financial goals: If you have not done it already, spend some time and find out what all should be your financial goals in life. These goals could short term in nature, medium term or long term in nature.
Where do you stand now?
Find out all about your current investments including Mutual Funds, EPF, PPF, FDs, insurance policies, bank accounts etc. It’s very important to have a clarity about where all you have invested.
Keep a watch on expenses:
Use technology or any of the conventional methods to track your expenses. Once you know your expenses, along with your assets and liabilities, 60% of your job relating to financial planning is done.
Have an asset allocation plan: Create an asset allocation plan to meet each of your financial goals, starting with mapping existing investments with goals and assessing how much more you need to invest regularly (like SIPs) to meet your goals.
Review Portfolio: Monitor your portfolio performance regularly vis-à-vis your financial goals, take corrective actions as required and maintain discipline of regular investments without becoming victims of human emotions of greed and panic caused by volatility in financial markets.
Take a life cover: Ensure that all the bread earners in the family have sufficiently protected their dependents from calamities of nature by taking life insurance cover, as per their Life Time Value.
Have a health cover: Ensure that each family member is sufficiently covered for any medical exigencies.
Prepare a will: Make sure all the adult family members have made their Wills.