2018 has been a great year so far… How about making it even better?
With improved finances, you can look for a much better 2018 that ensures better cash flow, stronger financial health and a buffer to help you explore the best financial options.
To get you started, here are 3 financial checks that you should run now for a better 2018:
1. Review your tax options
Here are some tax-saving options you have:
- PPF: PPF allows the largest deposit of Rs.1.5 lakh per year, which makes it fully tax-deductible. But, it has a lengthy lock-in period of 15 years, which means you can’t take out your investment before that. And if you do, prepare to be penalised in the form of additional charges.
- Health Insurance: You get tax benefits on health insurance. For example, Rs.30,000 is tax-deductible on the premium. If you are aged above 60 and pay the premium for your parents, you can claim Rs.60,000.
- Tax-saving mutual funds: Also known as Equity-Linked Savings Schemes (ELSSs), these give good returns. But, these can be risky as they are linked to the performance of stocks. There is also a lock-in period of three years.
- Tax-saving Fixed Deposit: This offers a healthy mix of risk-free investments with good returns. As always, you should research and choose the best option. For example, the Bajaj Finance Fixed Deposit interest rate is an ideal choice. You can look for interest rates of 7.85% (for new customers), 7.95% (existing customers), and 8.10% (senior citizens).
2. Review your Retirement Savings Plan
It is never too early to start planning and saving for retirement. Remember that you have to beat inflation in the long run. The value of Rs.10,000 today will have much less value in future. So, look for retirement options that can help you in your sunset years. Some of the options are:
- Pension insurance plans: You assign a part of your savings to the insurance and it accumulates as a retirement corpus. Look for pension plans that will give you a steady cash flow in your post-retirement years. The best ones help you plan your retirement in gradual stages.
- ELSS: It is best to start this kind of investment at an early age. You can invest in a long-term plan to save for your retirement. But, there can be a temptation to spend the accumulated money before retirement.
- Senior Citizen FDs: These are available at both banks and non-banking financial companies (NBFCs). These FDs specifically help senior citizens save and invest their money. The money, in turn, earns an interest.
Senior citizen FDs offer better interest rates than normal FDs do. For example, Bajaj Finance FD interest rates for senior citizens are 8.10%, which is higher than those for existing customers. To top it, FDs are risk-free and secure. It also offers flexible tenors and the smallest deposit of Rs.25,000.
3. Review your investment portfolio and protection plans
Now you know how you can invest your funds in your chosen tax-saving products. You should set aside a corpus for retirement. There is one more aspect left – protection. All that saving and investing will mean nothing if you and your family aren’t well protected. Here’s how you can ensure your protection:
- Term insurance plan: When it comes to protection, a basic term insurance plan will serve you well. It provides a corpus for your family in the tragic event of your death. The earlier you invest the better, as the premium will rise with your age. The premium is also tax-deductible.
- Medical insurance: Medical costs have been rising exponentially. A good medical insurance policy can protect you from spending all your savings in a medical emergency. You can even add riders that will give you extra protection.
Your investment portfolio should be a healthy mix of investment and insurance. You should include tax-saving options and financial investments that help generate wealth. Review your finances from time to time, so that you are not stuck with bad investments or insurance.
To Sum Up
Planning, reviews and research take a little time. So, start now. Don’t wait until the last minute, for the end of the financial year in March. Get a fresh start in 2018 by incorporating healthy financial practices before the New Year. Then, make the most of 2018 and beyond, with a solid financial foundation.
Also Read: Complete investing Guide