Year End Financial Planning Checklist

18 November 2022
4 min read
Year End Financial Planning Checklist
whatsapp
facebook
twitter
linkedin
telegram
copyToClipboard

One more glorious year is nearing an end, and another splendid one awaits. But, while the coming days are filled with festive season recreation, this is also the time for the yearly ritual of assessing your financial health.

This also calls for creating a solid financial plan for the next year to keep your money game strong. So here are some tips to help you with year-end financial planning.

Year-End Financial Planning Checklist

  • Review Your Portfolio

It is always good to keep reviewing your investment portfolio periodically; year-end is a good time for this. This is to ensure that your portfolio is on track. Also, take note of the total returns your portfolio has generated this year.

Check whether your portfolio is well diversified; there shouldn't be more funds of the same category, as it may lead to over-diversification and ultimately hurt your returns. Instead, you can consolidate your portfolio with only one top-performing fund under each category.

Also, check whether the asset allocation between debt and equity is per your goals. For instance, if your portfolio is predominantly equity-oriented, you can increase exposure to debt funds( you can choose liquid funds) to create a balanced portfolio. In addition, investing in liquid funds will allow you to meet expenses during an emergency and minimize short-term losses due to equity.

And finally, check the performance of individual funds. If you see that the past returns of this fund compared to other funds in the same category are lower, then you can stop SIP. You can then channel your money to a well-performing fund in the same class instead.

  • Take Care Of Your Taxes

This is another essential exercise which needs your utmost attention while assessing the current year and planning. Tax planning should never be a standalone, last-minute activity. It should be included in your financial plan. Watch out where you stand in being taxed. If you are at the margin of crossing over to the higher tax slab, manage your deductions and work on your increased tax exposure.

Invest in avenues that fetch you dual benefits- high returns and tax benefits. ELSS or Equity Linked Savings Scheme is one option that comes with dual benefits of tax deductions and high returns. Also, they have the lowest lock-in among other tax-saving instruments, which is an added advantage. Plan your taxes in advance and fully utilize the exemption limit.

  • Finish Of Existing Debts And Loans

It's good to enter a new year with minimal to no debt. So plan your finances in a way that equips you to clear off your loans and debts as soon as possible. Your priority should be to pay off short-term loans that accrue a higher interest rate. For instance, credit card debt should be finished off at the earliest. Then move on to long-term loans, say home loans etc. and accommodate their complete or partial repayment in your financial plan, as the case may be.

  • Increase Your Contribution To Ongoing Investments

The end of the year also fetches your goodies in the form of festival bonuses. Also, factoring in the increment you may get next year, you can proportionally increase your contribution towards your long-term investments. For instance, if currently, you are contributing 20% of your income towards investments, consider making it 25% to 30%, depending on your family's requirements.

  • Review Or Buy Your Insurance Policy

This is when you must review your insurance policies, and if you are not insured yet, you must plan to do so in the coming year. Do not consider insurance as an investment; instead, it is a life cover that will ensure your family will not get stranded if something unfortunate happens to you. Always go for plain-vanilla insurance schemes with lesser premiums and higher or similar coverage as other fancy products in the market.

  • Start Investing If You Haven't Already

It may so happen that you have been investing in traditional financial avenues like FDs and PPFs. While having them in your portfolio is good, mutual funds are your best bet if you are looking for accelerated wealth creation. It is one of the few instruments that can offer you inflation-beating returns.

You can choose a wide variety of funds based on how much risk you want to take and whether your goals are long-term or short-term. Remember, any time is a good time to invest if you enter with the right expectations and a sound strategy. All you need to do is take the first step. Then, check out a few online investing platforms suited for novice investors like you. They can provide the requisite resources to help you make the right investment decisions.

While you reflect on the passing year and plan, take a minute to appreciate the financial milestones you have achieved, and note the lows. Then, please make a new plan factoring all variables and stick to it. However, ensure your plan is flexible enough to accommodate occasional splurges so that you don't feel guilty about indulging yourself and your family.

Happy Investing!

Do you like this edition?
ⓒ 2016-2024 Groww. All rights reserved, Built with in India
MOST POPULAR ON GROWWVERSION - 5.1.5
STOCK MARKET INDICES:  S&P BSE SENSEX |  S&P BSE 100 |  NIFTY 100 |  NIFTY 50 |  NIFTY MIDCAP 100 |  NIFTY BANK |  NIFTY NEXT 50
MUTUAL FUNDS COMPANIES:  GROWWMF |  SBI |  AXIS |  HDFC |  UTI |  NIPPON INDIA |  ICICI PRUDENTIAL |  TATA |  KOTAK |  DSP |  CANARA ROBECO |  SUNDARAM |  MIRAE ASSET |  IDFC |  FRANKLIN TEMPLETON |  PPFAS |  MOTILAL OSWAL |  INVESCO |  EDELWEISS |  ADITYA BIRLA SUN LIFE |  LIC |  HSBC |  NAVI |  QUANTUM |  UNION |  ITI |  MAHINDRA MANULIFE |  360 ONE |  BOI |  TAURUS |  JM FINANCIAL |  PGIM |  SHRIRAM |  BARODA BNP PARIBAS |  QUANT |  WHITEOAK CAPITAL |  TRUST |  SAMCO |  NJ