Before you even know it, a year has already passed. Soon, March 31 will be here, beginning a new financial year. You might realize you didn’t have time and enough information to plan your tax savings and investments. To avoid the repetition of the same mistake, here is the list of 9 essential things to do at the start of the financial year 2023
A new financial year is the best time to plan and make clever investment decisions to save tax. Generally, the start of a new financial year is not given as much attention as the end of the previous one. Many tasks need to be completed at the end of a financial year. These are finalizing accounts and filing returns.
Once all these mandatory tasks have been completed, the start of the financial year is often ignored. Therefore, the beginning of a financial year is the ideal time to mend any financial mistakes made in the previous year. It is also the time to make the right financial choices to optimize next year’s investment portfolio.
Here are the top 9 important things to do at the start of the financial year 2023:
1. Re-evaluate your goals
One should assess their financial goals, plans, and investments at the start of each fiscal year. The target prices are likely to move up or down depending on the performance of your assets. In the case of house prices, for example, prices might have gone up since you planned to buy. In light of this, it is time to review their investments. This is to ensure they are in line with their goals. Invest more if there is a gap to hedge.
2. Balancing the portfolio
Amidst the Ukraine-Russia crisis, recession fears, and high inflations, the markets have been volatile recently. As a result, the asset assigning of your portfolio would also have changed. The portfolio should be reset to your desired allocation. This can be done by selling some equity investment tools and investing the proceeds in debt and gold to achieve your desired budget.
Investors who regularly rebalance their portfolios have been shown to generate greater returns than those who do not periodically reassess their portfolios. If you want to start investing in gold, you can begin investing at a minimum investment of Rs 100. Click here to learn more.
3. Constantly increase contribution to SIP
With a new year comes a new increment. Salary increases should not be consumed by lifestyle inflation. When money is available, very few people can control their purse strings, despite increasing take-home pay. Your investments should also increase as your income increases. If you already have SIPs, you should increase the investment by 10%–15%.
4. Take tax deductions by investing in ELSS funds
You should start their ELSS SIP in April. Doing so means you do not have to worry about tax planning at the last minute. A tax deduction of Rs 1.5 lakh is allowed under Section 80C for ELSS investments.
5. Start an NPS account
There is no doubt that National Pension System (NPS) has become more attractive in recent years. Earlier, the government introduced an additional tax benefit of Rs 50,000 for those who invest in NPS as per section 80CCD (1B) of the Income Tax Act. The government made 40 percent of the fund’s corpus tax-free last year.
To make it possible for individuals with Aadhaar cards to open an NPS account online, the PFRDA has made it possible. As a result, it is now a simple affair that takes only 15–20 minutes to complete.
6. Forms 15G and 15H must be submitted
To avoid paying TDS on investments, senior citizens, who are not in the tax bracket can submit Form 15G or 15H. It is essential to ensure that an individual meets the eligibility requirements before completing these forms. Individuals who make a false or inaccurate tax declaration can face stiff penalties from the tax department.
7. Increase the deduction for PF
There has been a reduction in interest rates on small savings accounts. Currently, the PPF will give you only 7.1% of your investment. The Voluntary Provident Fund (VPF) is another option to earn more. The interest rate offered by the scheme is 8.1%. This is higher than that of small savings schemes.
Returns from the fund are exempted from tax. Deposits are also not subject to any restrictions. Ensure that the employer deducts more for your VPF contributions from their paycheck. Most companies can only perform this type of audit at the beginning of the fiscal year or at the end of October each year.
8. Examine health insurance
According to the current average medical expenses, it is recommended that individuals should have a health insurance policy. This should cover at least Rs. 10-15 lakhs to protect their family members against any medical emergency that may arise in the future.
The first and most important thing to note is that if a person has not linked their PAN Card and Aadhar Card, then it is highly recommended that you do so without further delay. You must also complete KYC with your banks so that all financial transactions go smoothly.
9. Analyze life insurance requirements
Individuals face increasing responsibilities due to significant life events like marriage, becoming a parent, buying a house, etc. You must ensure that their life cover is enough to cover all these additional responsibilities.
Add the amount you will need to cover the additional responsibilities to the estimates you would have utilized to determine the right coverage for themselves. You should also get whatever extra coverage is required.
In addition to providing monthly earnings to the individual’s dependents, the coverage should also cover all loans and keep sufficient for future one-time significant expenses such as their children’s education.
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When it comes to saving, there are many options available. It is essential to make several investments and start early at the beginning of a financial year. It is never too early to begin saving, nor is it ever too late to start saving.
With all the online options, saving doesn’t take much time nowadays. If you set up standing instructions with the bank, you can automate their savings. In this way, money will be automatically deducted from their bank account and deposited into an RD account or any other investment option of their choice. Start growing your wealth by investing in mutual funds at the start of a financial year. It is the best investment tool.
This is because it is comparatively safer and inflation-proof. Click here to learn more. Now is the time to save to maximize your returns and grow your wealth.