The new financial year i.e. 2022-23 has started. March 31 was the last date for tax-savings in the last financial year. Some people do tax savings in haste, just before the last minute i.e. March 31. This sometimes leads to wrong decisions as well. That’s why you should start tax planning from now ie from the beginning of April. We are telling you five steps to organize personal finance.
You should make a budget now for the needs of yourself and the family. Analyze last year’s income and expenses and set future goals. Bhuvana Sriram, director, House of Alpha Investment Advisors, said, “Look at your budget and financial goals and then decide whether you have achieved the targets or not. If there is a goal in the new financial year, you should move your money from equity to debt. – Need to move slowly.” Try to repay the expensive loan. You can do this with annual bonus.
Use the increment in salary to increase your investment in mutual fund SIPs. This will help you to achieve your goals. “Wealth creation will not happen unless you increase your investments every year,” said Shriram.
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2. Make tax planning a part of your financial plan
You should start tax planning now. You can start SIP in Equity Linked Savings of Mutual Funds or invest in PPF from April itself. You have to continue this work throughout the year according to your financial plan and goals. Girish Ganraj, Co-Founder, FineVice Finance Solutions, said, “Hastely investing at the end of a financial year often leads us to put money in the wrong instruments.”
3. Review your goals early
It is important to review your goals and the performance of different instruments. Nasreen Mamaji, Founder, MoneyWorks said, “Sometimes the short-term goals you set are no longer necessary. You have to identify them. Then you can move your investments towards longer-term goals.” You also need to focus on rebalancing your investment portfolio. If you see a deviation of 10% from the pre-set asset allocation, you can reset your asset allocation.
4. Check Your Insurance Requirement
It would be a good idea to take a look at your life and health insurance. Many people do this work before 31st March. As an insurance policy caters to your vital needs, it is not a good idea to look at it only from the point of view of a tax-saving instrument. “Check to see if your insurance cover is sufficient. If it is not enough, you should increase it now instead of waiting till March 31,” said Shweta Jain, Founder, Investography. As a thumping rule, your insurance cover should be at least 10 times your annual income. As far as health insurance is concerned, a couple above 40 years of age with two children should have a health insurance of at least 10 lakhs.
5. Don’t be tempted to make huge profits from crypto quickly
Investment in cryptocurrencies is increasing. However, in Budget 2020, 30 percent tax has been imposed on profits from this. Girish Ganraj said, “We would like to advise our customers that if your money is such money that you will not be sad to lose it, then you can invest it in cryptocurrencies.” He said it is a speculative investment, so you may have a small portion of it in your portfolio. After 30 percent tax, its return will no longer be the same.