Things you should consider before making your Financial Plan 2018.

HOME LOAN

Plan your home loan 2 or 3 years in advance. Before you plan to buy a residential house property calculate properly what exactly you are getting and at what cost. You should avoid buying property on loans as it eats most of your earnings unless you have a clear plan for its repayment. It’s important to monitor cash flow. Though the house will be your asset, your liability will be much more.

Quick Tips:

1. Keep your next five year Cash Flow ready in Advance.
2. Try to apply for a housing loan in joint name as it will let both the applicant avail deductions available for the principal amount payable under section 80C of Income tax.
3. Deduction available for the principal amount payable maximum up to Rs. 150000 and on Interest amount Rs. 200000 for each applicant.
4. Additional Deduction of Rs. 100000 is available under section80EE if you are first time borrower.

INVEST IN SIP

Start a SIP at a very young age. Your small amount of monthly investment can give you a return up to 20-25% p.a. Try to save at least 25–30 % of your earnings. It would be a good choice to start with a small amount and once you get comfortable you can raise it any time in future.Be careful about choosing sector and scheme while investing under SIP most of the investor ends up spoiling their investment just because the lack of the market or they go for the recent past results. Never go for the short term if you are planning for the SIP you should at least give it a tenure of 12 months.

VEHICLE

Avoid buying a car unless you use it every day. Most of the people chose to have a four wheeler for showoff. However, it is true that keeping a four-wheeler becomes a status symbol nowadays but you must think before spending your hard earn cash into the box of metal over four tires. Also, the most dangerous thing is to opt for having a car on Loan. If you finally decided to buy a car try not to opt for a car loan you may either Save “Invest in SIP” your monthly investment for next 1 or 2 years and you will see that you have not only saved your interest on a car loan you have earned better on your SIP compare to that amount you might have paid if you would have opted for Car loan a few years back.

MUTUAL FUNDS

Do not let this sentence scare you. “Mutual fund investments are subject to market risk. Please read the offer documents carefully before investing”. Most people avoid investing in mutual funds just because of this one warning. Yes, there is a market risk, but look at the history and growth of mutual funds.

WEDDING EXPENSE

Try having a simple wedding. As they said a common person only spends two times in their life once while buying a home and another while having marriage but why to spend money unnecessarily on things which are less important or better alternatives available.

LIQUIDITY

At least 20% of your wealth should be liquid so you can utilize it when necessary.

INFLATION

Considering inflation, you are actually losing money if it is in savings bank account. Do not keep huge money in savings bank account.

STOCK MARKET

If you invest in stocks, pay due attention. As stock market is comparatively much risky you must be attentive while making the decision for buying or selling. The larger part of your investment may vanish before you even get to know about it. It is advisable to have a consultant who can watch regularly on your behalf. If you invest in stocks have a separate account for delivery investment and Intraday investment. It is easy to monitor this way and also makes tax calculation easy.

SPEND WISELY

Do not have a belief that property and car make you rich. Its what you save and invest, that is important.

INSURANCE

Most of the people conceptualize insurance as a tool of investment for return or tax saving.Yes, it allows you to claim deduction under income tax but it is highly not recommended to opt an Insurance policy just for the sake of investment or tax benefit. Never invest in insurance for returns. Insurance is not an investment option. It is a risk management tool.

CREDIT CARDS

Never use credit cards for lavish spending. Use credit cards intelligently and for needs not for want. Cancel all credit cards before you die. Or inform the family about all your accounts, credit cards, loans and saving now itself. Even a small residue will cost your family much.

HEALTH IS WEALTH

Invest in yourself and then on other investments. We have all heard this phrase at least once in our life that Health is wealth”. This is the most important thing in our life which we often overlook. We never care our health or usually avoid until we get any alarming situation.Make a habit to look after your health so that you can use your wealth in a better way. Your personal life and health are the most important investment. Do have a regular health check and do healthy workout every day. Stay healthy and live happily.

MAKE A BALANCE

Always try to balance your earnings with your savings first, then on spending and loans. Never take unnecessary loans. Always have a reserve and utilize them and unless no other go never take a loan. Always have a plan for future events in your career, life, spending, and finance.Always have a reserve on your savings for contingency and urgent situations.

TERM PLAN

Always remember death can come anytime…..so please do buy adequate term Insurance if you have dependents. Prepare a Will. It may avoid unnecessary fights after you die.

Think & Act smartly!!

Team
RG Consultants