Not-so-safe investments: The meltdown of gold in 2013 was a big shock for many investors who considered the precious metal to be a secure investment. The change in the financial environment also rendered the yellow metal fragile in the investment market. With this, comes a lesson for the next year: Every investment comes with a certain amount of risk. Investments should be made in the light of this crucial learning.
Illiquid assets: Real estate is another investment that is traditionally — and typically — perceived as one with ‘sureshot’ good returns. However, 2013 has negated this belief as well. There are many areas in several cities and towns where property rates have either dropped or become stagnant. Investments like property, which have low liquidity and require a large amount of capital, should not be made on an impulse since it can take longer than expected to yield good returns.
Debt trap: For most of us, credit cards are like a magic wand — one swipe and you get what you desire. But, like most things, it comes with a flip side — a high risk of running into a debt trap. If you do not clear your credit card bills on time, or if you are in the vicious cycle of minimum payments, it is important that you devise a plan to get yourself free from debt. In such a case, paying off the outstanding in installments can be a good solution.
Income flow analysis: Take stock of your income flow through the year and analyse whether it was sufficient to meet your financial needs, or did you struggle to pay your bills. This income-expenditure study will give you a clear snapshot of your monetary health, which will, in turn, direct you to issues (expenditure exceeding income) that need to be addressed.
Financial goal evaluation: This assessment is a must at the close of every year. It not only helps you know where you stand financially, but also gives you a closer look at all your targets, whether achieved or yet to be attained. Based on the evaluation, the targets for the coming year can be set.
Financial loose ends: Most of us end up forgetting some parts of our overall financial plan. This could range from not writing a will to changing the address on your communication. Take this New Year as an opportunity to review the various loose ends on your financial life and set a time-frame to deal with it. For matters like estate planning, you can consult your financial planner to help you prepare the required documents. Hopefully, these pointers will help you streamline your finances and outline your expenditure for the coming year.
The writer is founder and CEO, Ffreedom Financial Planners