child and wealth creation

Get in Shape, Year beginnning Exercises for your Finances

A new year is always a good time to start something new, to inculcate good habits and to get yourself organized. A New Year is like a new phase, an opportunity to make things right as we are in high spirits and determined to make ourselves a better person and that is the reason we make New Year resolutions. Similarly a financial new year is an opportunity to put your finances right on. We have highlighted certain points of action for you, to give your FY 2018 a powerful start, and a smooth drive throughout the year.

1. Warm Up

The first things to do when you work out is warm up your muscles and prepare them for the upcoming exercises. Similarly, when you want to start your financial exercises, warm up your financial tissues, meaning assess your financial health. Have a look at your financial plan, determine the exact status, how close are you to the planned. Assess why or why not you were you able to stand upto your own expectations, and then reshape your plan as per your present and as per your future requirements. For those, who do not have an existing financial plan,

this is the right time to start. Get a financial advisor on board, and start planning.

2. Insurance

We always propagate 'Insure before you Invest'. And the idea behind this is you invest for your future, but you have to protect your future before investing.

Rishi Taneja is working in an MNC in Pune, he has a sweet little family and he invests regularly to provide for his future goals. He is investing to buy a home, he is saving for his kids' education, for his own retirement and is completely on track, he has a self medical insurance policy which is provided to him by his company, but he doesn't have a medical insurance for his family yet. Now few days back, Rishi's wife while coming back from the nearby market, met with an accident. It was a major accident and she needs 4 surgeries. The cost for the treatment is R25 Lacs and she isn't covered by medical insurance.

Rishi has no choice but to break all his investments, he even might have to sell some assets to provide for the treatment of his wife. Now he has to replan for his future, start investing afresh, might have to buy the assets which he will sell for the treatment. He is in a total mess. Had he taken medical insurance for his family before, the financial pain would have been significantly alleviated. He would have taken care of his wife, without worrying about money, without disrupting his future plans.

This anecdote explains the role that insurance plays in securing a safe financial future for you. So, if you aren't adequately covered, begin your year by insuring yourself and your family. Explore term plans, medical insurance, personal accident and critical illness covers to begin with.

3. Review your goals

This is also the time to review your goals, as you move ahead in time, your priorities change, newer responsibilities set in. Like you might be investing for a 2BHK a year back, but now you are looking to buy a 3BHK because you have a bigger family. So the goal has inflated and you should account for the alteration in your goal. So at this time, sit back, relax, think what are your present priorities, your new future goals and invest for the same.

4. Rebalance your Portfolio

One ideal way to invest is according to your asset allocation. You invest a % in stocks, a % in real estate, some in gold and some in debt instruments, like FD's, PPF, bonds, etc., which is based on your age, your goals, assets, liabilities, etc. You may have arrived at this ideal asset allocation some years ago and then you started investing according to this ideal ratio. But then over a period of time, different asset classes may have performed in different ways in your portfolio. These changes call for a rebalancing, sell the assets which have surpassed your ideal % and buy those which are falling behind. An investor should periodically review his portfolio and rebalance the same. A good time to do this is beginning of the year, especially if you are yet to define your own.

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