Financial Resolutions
for 2015
The start of the new year is often seen as a time to let go
of the past and start on a clean slate. As we get ready to usher in 2015, here
are a few measures that could make you a better investor and improve your
finances in the new year. Even if you manage to keep 4-5 of these dozen diktats
to yourself, you will find financial success in 2015.
I will start investing in direct mutual funds :
Direct plans of mutual funds are cheaper. On average, the
investor in a direct plan of an equity fund pays 50 basis points less in annual
charges compared to a regular plan. Lower costs mean higher returns for the
investor. The difference is smaller (about 15 basis points) in case of debt
funds.
I won't buy an insurance policy I don't understand :
Life insurance plans can be complicated products. Some give
large covers, others act as savings instruments. Some charge premium for the
entire term, others for a limited period. Some offer cover for life, others
till a certain age. Some pay at regular intervals, others give out a lump sum.
Each policy has its own utility. Understand your needs and then buy a policy.
I will learn to file my tax return :
Filing your tax returns is not rocket science. Even someone
with basic knowledge of taxation terms can do it himself. Tax filing portals
have made the process easier by dejargonising the tax forms. For a small fee,
they even check your tax return for mistakes and guide you on best ways to save
tax. Drop your aversion for this annual ritual and file your return yourself
this year.
I won't shy from stocks nor invest too much in them :
The year 2014 saw the Sensex touching an all-time high.
While this was good news for stock investors, many retail investors regretted
that they were not fully invested. Don't shy from stocks in the New Year but
don't also go overboard when investing in equities. Just stick to your asset
allocation.
I will review my portfolio and rebalance if necessary :
Studies have shown that in the long term, maintaining the
asset allocation of the portfolio yields better results than earning high
returns from an asset class. Rebalance your portfolio at least once a year so
that it regains the asset mix you had planned for yourself.
I will not invest in equities with a short-term horizon :
Equity was the flavour of the season in 2014 and some
experts have predicted that the best is yet to come. However, stock indices
will not move in a straight line from here. The mood may be bullish but there
will be lots of ups and downs. Don't invest in stocks if you have an investment
horizon of less than 3-4 years.
I will assess my health insurance needs and buy a cover :
Healthcare has become very expensive and even a short stay
in the hospital can leave you with a bill running into six digits. The only way
to safeguard your finances against medical expenses is by taking adequate
health insurance. It is best to buy a floater cover for the entire family.
I will learn a new skill to enhance my career prospects :
The job market is a jungle in which only the fittest will
thrive. Hone your skills or learn something new to stay ahead of the herd and
make yourself indispensable at the workplace. Not only will you be in demand
from other companies but your own company will leave no stone unturned to
retain you.
I will renegotiate my home loan or search for better rate :
It is widely expected that interest rates will decline in
2015 but the reduction will not be uniform across lenders. Look around for the
best rates for long-term loans and switch to a lower rate if possible. If the
loan has more than seven years to go, even a small reduction in the interest
rate can save you a neat packet.
I will actively look for a job that suits my profile better :
Are you unhappy, underpaid or just plain bored with your
job? If this is the winter of your discontent at the workplace, update your
resume and start searching for a better job in 2015. The job market is buzzing
with offers and the sky is the limit for the right candidate. Step out of your
comfort zone and turn proactive.
I will get rid of poor performers in my portfolio :
Equity funds gave spectacular returns in 2014, with some
doubling your money in 12 months. But some funds turned out a pathetic
performance. Despite the Nifty rising 30% and some funds shooting up 45% during
2014, some large cap funds rose by merely 20%. It's time to give such laggards
the boot and shift your money elsewhere.
I will not let other goals impinge my retirement :
Your child's education, a new car, a second house in the
suburbs--don't let your other goals crowd out retirement planning from your
financial plan. Whether you like it or not, one day you will retire. While you
can take a loan for all other goals, it won't be possible to take a loan to
fund your retirement.