Now that we are a month into 2019 – it’s time to realize that we don’t get too comfortable with our finances.
Setting money-minded goals and following through on them can have a powerful impact on your entire life. When you’re in control of your money, you’ll be more confident and better prepared to weather any financial storm that comes your way. Now that we are a month into 2019 – it’s time to realize that we don’t get too comfortable with our finances.
Hence, I am going to focus on a few smart money moves which you should be making in 2019.
1. Keep Stocks in Your Asset Mix
2018 was a volatile year when it came to investing in equities. Several people saw red in their portfolio, and it made investors wary of investing in the stock markets. My advice would be to not let a few volatile months mess with your long-term perspective of investing in the markets. Therefore in 2019, hold a portion of your portfolio in stocks for growth. To balance out, look at a few debt-funds and non-risk instruments to provide an income cushion during market downturns. Holding a balanced portfolio in 2019 is the best way to navigate changing economic cycles.
2. Invest in Short-Term Debt Funds
Several people are unsure about investing in short-term debt funds, owing to the risk associated with them. I always suggest that if you are starting out on your career, then have a mix of short-term debt funds. You can positively balance it by looking at investing in options such as NPS. The NPS is a good scheme for anyone who wants to plan for their retirement early on and has a low-risk appetite. Some of the benefits of investing in an NPS Scheme are:
# It offers returns that are much higher than other traditional tax-saving investments like the PPF.
# A deduction of up to Rs 1.5 lakh can be claimed for NPS – for your contribution as well as for the contribution of the employer.
# If you have invested for at least 3 years, you may withdraw up to 25% for certain purposes.
I believe if you maintain a healthy mix between short-term funds and long-term schemes such as the NPS, you could certainly work towards your goal of a balanced portfolio.
3. Invest keeping your retirement perspective in mind
A person’s expectations of returns, and risk appetite, can change with age. Upon hitting the age of 60, an age at which many people choose to retire, one faces the challenge of not outliving the resources one has accumulated. In order to attain optimal returns, maintain liquidity, and reduce risk, a good mix of fixed and market-linked products is necessary.
Hence, a smart move for 2019 will be to plan for your retirement, keeping in mind certain financial products which will suit your portfolio best:
Start by looking for a health insurance premium; this is a must have. The sole purpose of a health insurance is to provide you with the financial support during a health-related emergency or disability. Additionally, the tax exemption limit on premiums paid for senior citizens is now set at Rs 50,000 under Section 80D.
Consider investing in a Senior Citizens Savings Scheme, as it offers an impressive, assured rate of interest rate of 8.3%. One can invest up to Rs 15 lakh under SCSS and avail a tax deduction up to Rs 1.5 lakh under Section 80 (C).
The year is a very long period, and I am certain that no matter how much we plan every now and then, we may face some unforeseen eventuality – especially with our finances. The trick here is to keep some smart money moves, like the ones I have mentioned, under your belt and the year can be equally smooth sailing for you.
(By Rahul Jain, EVP, Edelweiss Wealth Management)