5 Things To Do At The Start Of The Financial Year
The new financial year 2022-2023 is here. If you
want to become disciplined with your finances, doing certain things at the
start of a new financial year can simplify your financial planning needs.
Here are five things that you need to do at the
start of the financial year:
Analyse your asset allocation:
It is essential to review your portfolio`s asset allocation before making any
financial decisions in the new financial year. You can rebalance your
portfolio`s asset allocation if there is any significant change in your asset
allocation because of recent market movements.
Let us assume that your ideal asset allocation
among equity and debt asset class is 80% and 20%, respectively. During a market
rally, the equity allocation in your portfolio may increase to 90%. If you are
not happy with the current asset allocation pattern, you can rebalance your
portfolio to the original asset allocation. To do that, you can redeem your
equity investment, or you can increase your debt investment. The rebalancing
exercise helps you to keep risk and reward at a level that is optimal for you.
Review financial goals: Financial
goal give a sense of purpose to your investment. So if you have financial
goals, this can be the right time to review your journey towards achieving your
financial goals. It can help you understand if you are struggling to achieve a
financial goal or if the cost of your financial goal has increased. You need to
evaluate your target investment amount and draw an alternative plan with your
financial advisor in such cases.
Review your investment: While
it may not be a good idea to check your portfolio daily, a timely review of
your investments can help you understand your investments` performance. A
review of your investment at the start of the financial year will help you
figure out funds that have performed exceedingly well and funds that have
underperformed its peers. You might want to reconsider further investment in
funds that have consistently underperformed its peers throughout the past few
Tax planning: Do you want
to have a stress-free financial year-end? If yes, then you need to start Tax
Planning at the beginning of the financial year. Tax Planning in April gives
you enough time to calculate the amount of money you need to invest and start investing
smaller amounts regularly instead of investing lump sum at one go. Equity
Linked Savings Scheme (ELSS) is a type of equity Mutual Fund that offers tax
benefits the maximum investment amount of rupees 1.5 Lakhs under section 80C of
the Indian Income Tax Act. It is one of the best tax saving investment options
as it provides wealth creation with tax benefits.
Increase your investments: You
can fulfil your financial goals earlier by increasing our Systematic Investment
Plan (SIP) by a certain percentage every year. The start of the financial year
is the best time to increase your SIP. Typically, increasing your SIP
investment with an increase in salary can help to reach your financial goal
easily. Moreover, by increasing your SIP with your salary, you are less likely
to spend more on splurges. You can aim for at least an annual 10% increase in
Asset allocation analysis, review of financial
goals, review of your investments, tax planning, increasing your SIP amount are
the five things you can carry out at the beginning of the financial year.
This blog is purely for educational purposes and
not to be treated as personal advice. Mutual fund investments are subject to
market risks, read all scheme-related documents carefully.
#niveshsimplied #fundvaliz #mutulfundsahihai #investment