Satyendra Bhardwaj
With new Financial Year 2022-23 or Samvat 2079 setting in, it is essential that you plan things right at the beginning rather than dumping your hard-earned money to save tax without proper thought towards the end of the financial year! Due to this habit of last-minute investing (or dumping!), many of us are forced to either take personal loan or salary advances (if available) to fill the gap to save taxes! So, to avoid such unwarranted scenarios, let us look at 5 things to do or plan out now:
Know your income: For proper tax planning or even budgeting, one should jot down the expected yearly income. If salary is the only source of income, then it becomes easy as by now most of you might have got increment letter in your hand. But, if you have other sources of income, say profit from equity investing, then you might have to wait till the end of the financial year to have a fair idea of gross income. Based on the same, write down gross income at a piece of paper.
Count the gap: Second thing to do is to assess the gap between money required for investment to utilise all available provisions under Income Tax provisions to save some money in hand and the amount you will be left with each month from ‘salary in hand’. This is a crucial link to meet your financial goals. Of course, you might come across a scenario (expenses) in the middle of the financial year which might reduce your taxable income, but you can’t keep waiting for the same, right! So, assess the gap and alter your expenses accordingly!
Keep aside investible money: The rule of the smart investment is to first invest, then make expenses! Well, this idea may sound bizarre, but it is an effective way to rev up your corpus for ‘fearless’ life! This idea of investing before expenditure presumes two rules, a) you’re practical about money to be invested, b) you keep a portion from your income in your bank account to fill up any gap or small amount of unforeseen expenses! If you’re in your 20s, start with investing at least 10 per cent your monthly salary and hike it with the same percentage every year with that of your salary increase. Having said that each one has unique set of family responsibilities, so fine tune this rule accordingly.
Assess your portfolio: Having made enough planning for optimum tax saving, focus on the assessment of your existing portfolio i.e., performance of your investment in mutual funds, equity or debt. With possibility of upward interest cycle in coming quarters, check if your equity or mutual fund investment is underperforming! If you’re confused, consult your RM from that mutual fund house or from other fund house to ascertain if the underperformance is due to overall market scenario or due to wrong investment decisions by the mutual fund house! Remember, sometimes, investment at the bottom yields eye-popping returns!
Insurance is the best policy: If you want above four things to work best for you, insurance is the key! With hospitalisation and related charges spiralling, it is essential to have various insurance policies (especially Health and Hospicash) in your file or inbox! These policies keep your investment plans on track in the event of unforeseen health issues. This is particularly important for those in 20s and 30s because most of the people in this age group do not feel the need of health insurance! But health crisis can come to any, age is no bar. Remember, a premium of Rs 8000 yearly paid for 10 years will look a wise decision when compared with two-day hospitalisation in a decent corporate hospital!
