As the new financial year kicks off, it’s a good time to take stock of your money situation. If you are a salaried person, you would be looking forward to a salary increment and bonus. You must enjoy your money to upgrade your lifestyle. However, you must also upgrade your portfolio. Let’s take a look at steps to take in April and May.
TAKE STOCK OF INSURANCE
With the start of a new year, it’s likely you now have more responsibilities today. If your family members are financially dependent on you, you must protect them adequately by having the optimum amount of life insurance. Term plans are best suited to cover life risks. Don’t wait till the end of the year to complete this most important task. Start your search for the ideal term plan now.
INSURE YOUR PARENTS’ HEALTH
The government has provided more incentives for you to adequately protect your family’s health. In the new financial year, senior citizens (anyone above 60) can claim up to Rs 50,000 under Section 80D for premiums paid towards health insurance, up from the earlier Rs 30,000. You can buy insurance for your parents and claim this deduction. This is over and above the deductions you can claim for health insurance bought for yourself, spouse and children.
START ELSS SIP
The best way to combine long-term wealth creation with tax savings under Section 80C is to invest in Equity Linked Savings Schemes — popularly known as tax-saver mutual funds. These equity funds with a three-year lock-in can be bought either as a lump-sum or via monthly Systematic Investment Plan. What’s more, you can start investing from your home and complete the paperwork online. The best time to start is April. By March, you would have sufficiently taken care of your tax savings under Section 80C of Rs 1.5 lakh.
OPEN NPS ACCOUNT
Why let go of the additional tax deductions of Rs 50,000 under Section 80CCD? You can start your National Pension Scheme account, start saving for your post-retirement life in it, and also take your total tax savings under Section 80C to Rs 2 lakh.
OPEN PPF
If you are a conservative, risk-averse investor, PPF is the best small savings scheme for you. Currently, the PPF provides tax-free returns of 7.6 per cent and has a tenure of 15 years. It is a long-term investment scheme with zero risk. You can claim tax deductions for your PPF investments up to Rs 1.5 lakh under Section 80C. The best time to start is April so you get full value for the year.
GET A DIGILOCKER
You should keep your financial documents in a place where you can access it at any moment. DigiLocker is a free cloud storage provided by the government of India. It not only allows you to upload, store, and share your personal and financial documents such as driver’s license and salary slips, it also helps you receive your documents from government and corporate entities using DigiLocker. If you start off the year storing your documents properly, your end-of-the-year paperwork would become a breeze.
REBALANCE PORTFOLIO
Take stock of your various investments and savings. Determine if any of them is going to be a laggard in 2018-19. For example, over-priced small cap stocks and long-term debt mutual funds are both a bad idea due to prevalent situations. Ensure the investments you have now promise to grow through the year.
FILE TAX RETURNS EARLY
Take stock of your Form 26AS, TDS paid, and tax-savers bought for 2017-18. Check with your employer about your Form 16. Don’t wait till July to file your tax returns. You can do it as soon as you have your documents in hand.
