7 Things To Do At The Start Of Every Financial Year

  In this article, we'll go over seven crucial things that should be included in your yearly start-of-financial-year assessment, as well as how to go about doing it. But before we get into that you need to understand that investment is also about choosing the right technologies. As one of the top brokers in share market, we at Zebu offer trading accounts with lowest brokerage, and an online trading platform to help you focus only on executing your strategies efficiently. 1. Review your asset allocation and, if necessary, rebalance The first step toward improved money management is to analyse your portfolio across multiple asset classes and rebalance if your asset allocation has changed significantly. Assume you started the year with a 70% allocation to equities, a 25% allocation to debt, and a 5% allocation to gold. Equities are up roughly 21% in FY22, debt is up 5.5%, and gold is up 15.4%. As a result, your portfolio is slightly more biased towards equity, with shares accounting for approximately 72.5% of your portfolio, 22.6% for debt, and 4.9% for gold. To get back to your original asset allocation, you'll need to rebalance your portfolio. Because your equity allocation has increased, you will need to register profits in equities and reinvest the proceeds in Debt and Gold in this case. Alternately, you might restructure your monthly SIPs to include more Debt and Gold. This activity guarantees that your portfolio's risk is balanced, allowing you to better manage drawdowns. 2. Examine Your Objectives The beginning of the fiscal year is an excellent opportunity to assess your progress toward your objectives. It's likely that the amount you'll need has risen more than you expected when calculating the amount you'll need. If you were planning to buy a car, for example, excessive input costs may have caused prices to rise above average. In this case, you'll need to recalculate how much you'll need to invest each month in order to have the money you'll need when the time comes. 3. Evaluate Your Portfolio While long-term investing is essential for wealth accumulation, this does not mean you should invest and forget. A portfolio review should be done on a regular basis, and the beginning of the financial year is an ideal time to do so. A review will show you which funds have outperformed, which have performed as expected, and which have underperformed. While it's tempting to get rid of laggards, you should be cautious about how you go about doing so. You should ideally only evaluate funds that have been underperforming for a long period (say at least 1.5 years). If the entire segment has fallen, a fund with negative returns may not be underperforming. As a result, you must compare the fund's performance to that of the category as a whole. For example, if the fund has declined but not as much as the category average, you may choose to continue with it due to its stronger downside protection qualities. When your goals change, it's also a good idea to review your portfolio. For example, when you were 10 to 15 years away from retirement, you began investing in an Equity Fund. However, you've nearly reached your goal amount and are only two years away from retiring. In this case, you'll need to devote a larger portion of your collected wealth to fixed-income investments. 4. Examine Your Life Insurance Requirements Your obligations expand dramatically after major life events such as marriage, becoming a parent, purchasing a home, and so on. You must ensure that your life insurance policy is adequate to meet all of these new duties. So go back to the calculations you used to determine the correct coverage for yourself, add the amount you'll need to cover the additional duties and get any additional coverage you require. Remember that your coverage should be sufficient to give a monthly income to your dependents, pay off any debts, and leave money aside for future one-time large needs such as your children's education. 5. Look over your health insurance policy Major life events such as marriage and becoming a parent requires a review of your health insurance coverage. If you purchased a policy before getting married, you most likely purchased an individual policy with an adequate quantity of coverage. With more family members, you'll need not simply a larger policy, but you'll also want to be sure they're protected. Converting your health insurance policy to a family floater and boosting the coverage is the simplest way to accomplish this. This ensures that the coverage remains in effect and that you do not miss out on any advantages. 6. Begin Your Tax Preparation It's ideal to begin tax preparation early in the fiscal year. That's because you'll have enough time to figure out how much you'll need to invest to save the most money on taxes and weigh all of your possibilities. Furthermore, because you have the entire year to invest the funds, you can spread them out. If you plan to invest in market-linked products like ELSS and NPS, tax planning at the start of the year is even more important. Having a SIP that helps you save tax throughout the course of the year ensures that you benefit from market ups and downs. If you wait until the last minute, though, you will be forced to invest even if the markets are at an all-time high and there is a chance that they will fall. Furthermore, the money you will invest will be substantial. 7. Increase the amount of money you put aside each month With an increase in your salary, you should increase your SIP investment by 10% per year. This will assist you in achieving your financial objectives more quickly. Other investment options include the National Pension System (NPS), which provides an extra Rs. 50,000 deductions in addition to the Rs. 1.5 lakh deduction provided under Section 80C. You can register a Sukanya Samriddhi Yojana account for your daughter if she is under the age of 11. This plan will give you a better return than the PPF or other small savings plans. These methods will assist you in improving your financial situation and ensuring a smooth financial journey in the future.