10 smart financial moves to make in 2018
“Financial planning is about providing guidance you can trust.”
It is always beneficial to plan and have a plan for your future finances ready. You certainly don’t want to make the same financial mistake you made before. It is also important to plan your investments well.
The 2018 Budget was recently announced and while there are no changes to personal income tax, long-term capital gains will be taxed at 10% for an amount greater than Rs 1 Lakh, without indexation.
So how should you plan 2018 to make it economically viable?
To make your 2018 financial year a great HIT, here are 10 financial moves you can make:
1.) Venture into a plan or term insurance
Life has its own course. You can never be aware of what will happen next. It is unpredictable and therefore it is important that you plan ahead.
Invest in a term plan, as a way to secure your family’s future. The term plan or term insurance is financial protection that helps your family financially in your absence. Term insurance is becoming increasingly popular as it comes with many benefits.
2.) Have health insurance
Health is wealth and that fact cannot be denied.
Whether you have a family or live an independent life, investing in a health plan should be your priority. Accidents and ailments are not uncommon, and the sad thing is that medical treatment is not cheap in our country.
Having health insurance helps you get through sudden medical emergencies.
3.) Invest in Systematic Investment Plans (SIP)
It is one of the easiest and most convenient ways to invest money in mutual funds. You have the freedom to risk your money either weekly, monthly or quarterly. Systematic Investment Plans grant you an already decided amount to be paid evenly on regular terms. This type of investment in mutual funds is considered the safest and most suitable on the market.
4.) Buy real estate
After the implementation of the Goods and Services Tax (GST) in 2017, real estate investors were not very sure of their financial security. However, the outlook is likely to change in 2018. It appears that the government is looking for new ways to revive growth in real estate.
With the Real Estate Regulatory Authority Act (RERA) in place, there is no room for false promises by real estate developers. Chances are you don’t have to deal with cheating or holding delays either. Plus, fees are low across the country. Due to good market conditions, this may be the right time to buy a home or business premises. But be sure to take advantage of the benefits of a home loan while making this expensive transaction. Instead of paying the full cost in cash, use a home loan to pay a portion of the total cost and save on taxes. What better time to invest in real estate than now?
5.) Fixed evergreen deposits
It is a financial mechanism provided by banks where investors receive a high interest rate that varies from 4 to 6.5 percent than normal savings. Here, your money is deposited into a fixed deposit account for a certain period of time without and you cannot withdraw it until maturity. The expiration dates can vary from one week to 7 years depending on the investors. And since your money is locked in, you have no choice but to save. Your Fixed Deposit loan is available, which you can opt for in case of emergencies.
6.) Tax savings investments
Balance your portfolio well and control tax saving instruments, while investing in the year 2018. You are eligible for a tax deduction of up to Rs. 1.5 lakh as per Section 80 (C) of the Income Tax Act. Make sure to use this carefully.
In the cases of the traditional debt tax savings instrument, profitability has declined in recent months. Invest in options like ELSS to maximize your ROI.
PPF is another option you have. Although the interest rate has dropped recently, your money is safe here.
On top of that, use the personal loan for expenses like the child’s education or home renovation. This will help you claim the tax benefit under section 80 (C).
7.) Invest in balanced and liquid funds
Debt mutual funds and liquid funds offer moderate returns, are tax efficient, and will keep your hard-earned money safe. The percentage of these that your portfolio should make up is entirely up to you.
8.) Have an adequate budget
Having a proper budget and sticking to it is crucial.
Did you have a budget for 2017? If not, it’s time to have one. And if you already have one, make sure it doesn’t have the same loopholes as the old one.
Every person needs to have a budget no matter how much money they make. Keeping a constructive budget helps you keep track of your expenses. It will also help you keep track of your savings and plan your finances well.
9.) Evaluate your monthly expenses
Keep track of your monthly expenses to know where your money is being spent. Spend some time reviewing your expenses and cut down on unnecessary expenses. This will help you build savings in the future.
10.) Maintain a good credit score
An acceptable credit score helps you acquire greater purchasing power that will help you achieve your dreams of buying a home or financing your child’s education. Always monitor your credit score.