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Financial planning for FY17: PPF, insurance and early tax-saving moves a must
April, 28th 2016

Financial planning: It is advised to resolve setting aside a quarter of your income for investment from your monthly salary to generate wealth.

Financial planning: Money has to be set aside for long-term goals such as retirement planning. All of it may be too much for you to handle and you delay taking decisions till the last moment.

It’s nearly a month into the new financial year and you still struggling with your financial plan for the year? There are immediate expenses ahead like paying your rent or EMI for your home loan or insurance instalment. Then there are other bills that would come up every month. Investment have to be made for tax planning. Money has to be set aside for long-term goals such as retirement planning. All of it may be too much for you to handle and you delay taking decisions till the last moment.

In our second article in the series on how you should plan for the finacial year, Independent financial advisors, Anil Rego, CEO & Founder, Right Horizons, advises to shed that lethargy and move ahead quickly to plan in advance for the entire year. He advises approaching your human resoures department at the beginning of the year with your 80C investment for the year to get the tax deductions in your salary. That would get a better take-home package throughout with less tax deducted from your monthly salary.

He also advises to resolve setting aside a quarter of your income for investment from your monthly salary to generate wealth. At least half a year’s salary should be in liquid-plus funds that can be accessed easily during emergencies purposes. Rego also advises that you take a relook at your insurance cover and ensure you have sufficient life, medical and personal accident insurance. In an uncertain world, these can come handy to you in case of medical emergency or to your family in case something happens to you.

Here are Rego’s 10-point suggestion to you to plan your finances for the year.

-Make a new (financial) year resolution to invest at least 25 per cent of your income.

-Resolve to invest every month in a systematic manner with definite goals.

-Prepare a tax savings plan to enjoy most of the benefits the government offers – and the entire Rs 2 lakhs u/s 80C. This includes Rs 50,000 into National Pension Scheme.

-Prepare your list of deductions (80C, medical insurance, rent/ home loan principal and interest) and be the first to submit the list to HR.

-Do your tax deductible 80C investments at the beginning of the year if you have the liquidity. If not make monthly deposits to complete the investments by January 2017.

-If you are eligible for tax benefit under Section 15G/H for fixed deposit, submit the forms to the company or bank.

-Open a Public Provident Fund (PPF) account for every member of the family.

-Revisit your insurance cover and ensure you have sufficient life, medical and personal accident insurance.

-If you get an increment or bonus (it is appraisal time at many companies), start a fresh Systematic Insurance Plan (SIP) in a diversified equity mutual fund.

-Keep at least 6 months household expenses in a liquid-plus mutual fund for contingencies. Start funding it now.

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