The time to close circa 2008 is just a few days ahead and this will be one of the most remembered years in several ways ? though not fondly. However, there are several realities that have come to the fore that warrant immediate attention. In many ways the unfortunate incidents that unfolded throughout the year have taught us lessons that will only enrich our lives and the way we manage our finances. In that sense it is a blessing.

The mood is clearly not upbeat at the moment. ?Just imagine, my two crore equity portfolio is now less than a crore half over the year,? says a high net worth individual, not wanting to be named. ?How can I expect the mood to be upbeat? Me and my family will spend the new-years together not like the last time when we all went to Langkawi islands in Malaysia,? he adds.

It?s not just the equity losses; the impending slowdown is also going to impact the way business is getting done. So, brace up for lower expenses and perks and even a lower salary hike, especially those in higher management positions, say financial planners. ?Lower hike is alright, but there are threats of relocations and even retrenchment,? says Vinayak Sampat, a Mumbai-based senior executive in an IT firm. ?All this is rather scary as this could throw the regular life off-balance,? he says.

Tough times don?t last, tough people do. Hence, with a view to make the most of the situation and to start the new-year with a renewed vim, it would require some work. And getting a lot of things sorted out this week would enable you be in a position of strength and control before the beginning of the new-year.

The review

?Before embarking on this exercise, it would be wise to first review your portfolio performance and see what is damaged and where,? says K Hegde, a certified financial advisor. ?It would therefore work to build out your own balance sheet and profit and loss account. A sitting in with your chartered accountant or financial planner would be much better,? he adds.

There are a lot of people who get stressed unnecessarily and tensed when there is no reason to be. If you are working on a long-term plan and there are set objectives that you have, you just need to see if things are in alignment with those as against taking rash decisions like completely dissolving an equity portfolio and pumping money in fixed income related avenues.

A study by FE reveals that around 70 companies have actually seen their share price grow. And though the number is drastically lower than the number of shares that had advanced last time but many of these are companies like Hindustan Unilever, Colgate Palmolive, Hero Honda and Castrol Glaxo Smithkline Pharma, are large cap companies and would be in many portfolios already. And there are several mid-cap stocks like Shree Ashtavinayak Cine Vison and Kohinoor Foods that have seen a positive movement in their share prices.

?I did a quick review and found that some of the stocks that I have might have fallen over the year, but over the past three years have still given me returns and I am still positive on the gains from them,? says Keyur Bhatia an entrepreneur. The point that Bhatia makes is that investors need to take a long-term view and not just an annual review. Yes, over the year a lot of value would have been lost, but over a long-term time frame good stocks have always performed (more on wealth creators on page 14) and this must be kept in perspective.

Moreover, there are chances that your portfolio might have lost value annually, but then this year the indices have halved. It would still be better to compare your equity portfolio against the benchmark indices and check out your performance. You might be in for a surprise.

However, there are chances that your investment strategy last year, this time, would have been to gain from massive stock price movements and have a large trading oriented portfolio. This might have caused a lot of damage. Then this could well be the right time to take corrective action, if you already have not done so.

Moreover, while sitting in with your chartered accountant or planner do work out your personal balance sheet with your assets on one side and also your liabilities, more importantly do work on your monthly cash flows. This is a very healthy practice as it allows you to have control over your expenses. ?Thinking that cash stream would only increase is now a fallacy that will need to be corrected this year,? says Sampat. And, it need not be erudite a simple income and expenses column would let you know where your money is going.

?This is an eye opener as I could see several areas where I could have cut expenses and saved a lot of money. As much as a lakh a year,? he says. These could come from some simple things like no leaving the lights in the porch of the bungalow on for more than required or simply switching off the air conditioner smartly. Petrol bills, credit card statements, telephone bills and utility bills are a few areas that you might want to look into. Sometimes, ?Last year there was a devil may care attitude, but now, it has vanished,? he concludes.

Rework

What you can monitor, you can manage, is an old management adage and this is applicable with your personal finances as well. And, to maintain fiscal fitness over a long time this is an exercise all must undertake at regular intervals.

After a sustained bull-run in many asset classes, there is likely to be a period of correction and also consolidation. At the same time, there are family priorities and goals that need to be aligned with these expected conditions.

?Since most of the global markets are going to be closed and international business activity is expected to ease as the festive season sets in, I will be using this time for a short trip with my family and will use this time to discuss our plans ahead in the coming years,? resolves Shiven Tonk who has plans for a trip to chilly Mussourie.

A detailed discussion with the family members about the years ahead and understanding their aspirations and plans is an ideal plan near or around the Christmas vacations. Here, as financial planners would say, it would be ideal if you could mark out key events in the year specifically and also three years ahead. These could be sending your child overseas for a training programme in the next two years. Now, putting a number to this event would be important and this needs to be put on paper in your objectives or goals section. Depending on these events you would then be able to come up with a projected cash flow.

?This is an important exercise and please do not rush through this in a routine like manner,? says Dhiraj Nikam a financial planner and counsellor. ?This could also be a good time to make your family aware of the tough or changing times and the seriousness of the discussion,? he adds. Many times children do not understand why their allowances are being cut and why suddenly lifestyles have changed. For some, this could be a traumatic event and this can be managed through communication. ?It would work if you deal with matters in a direct yet compassionate manner in such circumstances as things should not be hidden and yet the family should not get scared beyond wits,? says G Shailaja, a psychiatrist.

And after this preliminary exercise is done, set an appointment with your chartered accountant or financial planer or wealth manager to sit along with you and see if a rework of your plans is required. Here the old wise saying, ?If it aint broke, don?t mend it,? works the best. Remember, financial plans and wealth management plans are made for the long-run and frequent course corrections are generally not advisable.

Once again, document all the plans and create a recording system for these so that in your absence, your family will be able to understand the details and carry them out. This is something we should realise from the unfortunate incidents that happened in Mumbai when innocent people lost their lives rendering many destitute for no fault of theirs.

Now, once you have reworked your plans and objectives and goals, it is time to swing into action. Execution is the mantra for success. Many good intentions, resolutions and plans have not seen the light of the day, as they were not actioned out well, say planners.

The reload

Some of the things that you will want to do include weeding out unnecessary stuff. While on the review stage, you would notice that there are several things in your portfolio that you are not even aware off. ?I noticed that there were at least 20 companies whose stock I owned and did not know that I did. Many of these were picked during the IPO boom in the mid-nineties and several now. Some did well for a bit and are now lurking in some corner,? says Bhatia. It is not uncommon to suddenly find some matured fixed deposit lying in the corner of your safe or bureau. All this is time, energy and money wasted. So, when trying to get fiscal fitness, cut lard off every nook and sweep through your portfolio totally.

And, if your plan includes to rebalance your portfolio then now is the time to go ahead with it. Clearly, the growth theme that persisted over the past five years will be moderated and there will be an emphasis on value.

With the current market conditions there are a lot of value opportunities floating around the place. All these have to be, however, in alignment with the plans you have worked out. And if you think you have in you to trade and make quick gains from the asset markets, say real estate or equity, set some funds aside for these separately and do not let them mingle with your overall plans.

Now, getting into fiscal fitness would require you to cut corners and action is the best remedy here. Some of the actions that most people put-off for another day include reconciling bills and expenses. Credit card bills, telephone bills, restaurant bills are the biggest areas where slippages happen says personal finance experts. Keeping a tab on them is also amongst the favourite resolution of many.

Then there are issues like not filling in nominations while making investments, taking out insurance policies and personal accident policies is another area. This becomes extremely critical as your family and you could suffer due to some unavoidable exigencies. It works to keep a tab on these small things. And if you have not been looking at these things, this would be a great time to start. Merry Christmas!

The put-off quotient

Answer these questions to see how you fare on the put-off quotient and what should be the action you should be taking after knowing this.

• I have prepared a detailed will and it has been communicated to my family and lawyer

• I am aware of all the nominations in all the deposits and insurance schemes

• I know the difference between a beneficiary in a will and a nominee in an investment scheme

• I know the exact value of my equity portfolio and am aware of how many stocks I have

• I am aware of the returns from my mutual fund investments and how they have been faring against appropriate benchmarks

• I know the exact (10% variance allowed) cash outflow of expenses every month

• I know the billing dates for my credit card and telephone bills.

• I am aware of the maintenance expenses for my real estate investments

• I am aware of the interest I pay on my credit card bills (the outflow not the rate)

• I know (10% variance) how much my annual outflow (expenses and assets) would be in the next year

• I am clear about my exact net worth (10% variance allowed)

• I have a fair estimation of the exact tax outflow I?am likely to face next year

• I still remember how much my previous vacation costed

• I am also aware of the insurance policies that I have and to what extent me and my family is covered

• My family knows of our financial situation

• We have jotted down all our family events and goals for the next five years

If you have answered as yes:

5 or less statements: Then you need urgent financial attention and no matter how wealthy you are you need to consult with some expert or take matters into your hands. To paraphrase what Mark Twain said, if you thought expert advice was expensive, try ignorance.

8 or less: You are doing well, and you could do better. It works to speak about your finances with your family and friends and even experts.

10 or less: You are in great shape and you could also advise your friends and relatives to do the same.

All yes: Congratulations! You are the best (if you have answered these honestly). You too should advice friends, relatives and peers about the benefits of such discipline and you could actually serve a lot of people. A fiscally fit nation is a strong nation.