What’s your plan for 2016? This is a very common question we all face around New Year every year. We have so many resolutions which may range from waking up early in the morning to setting up our financial goals. Yes, the latter is very important as it will help you be a better investor and improve your savings. Stick to the following financial resolutions to make sure that you are financially secure this year.
1. I will not invest in insurance randomly
Don’t invest in life insurance for the sake of investing. Buying a life insurance policy without understanding its terms and condition is not advisable. Different policies maintain different terms and conditions. Many of them offer whole life insurance plans while others offer term life insurance plans. Many of them may act as savings instruments while others may provide large covers. Many of them charge a premium for the entire term while others charge it for a limited period. There are life insurance policies which pay at regular intervals while some other policies provide a lump sum amount at the end. Each life insurance policy comes with different features; therefore, it is important to know your needs and then proceed to buy one. If a policy does not contain what you expect to be covered, you should take some time to look out for a policy which will suit your needs better.
2. I will search for a better rate for my home loan
Following the recent mandate by the Reserve Bank of India, it is expected that the interest rates on all kinds of loans will go down in 2015. However, this reduction will vary from lender to lender. So, spend some time in researching the home finance market in order to find out the best rate for you. Or, try to switch to a lower rate of interest on your existing loan, if possible. Even a small reduction in the interest rate can help you save a lot.
3. I will try to keep my career skills updated
Keeping your professional skills updated will help you to compete with the current job market. It is important to improve your skills and strive to learn something new so that you can stay ahead of the curve and make your presence felt at the workplace. Also, it will add to your confidence levels and reduce your financial and job related insecurities.
4. I will invest in direct mutual funds
Investing in direct mutual funds is cheaper than a regular plan in mutual funds as the agent’s commission is bypassed. An investor pays 50 basis points less in annual charges by investing in direct mutual funds. So, it will help you earn higher returns while spending less.
5. I will make a proper plan for my asset allocation
A proper asset allocation plan will help you to balance risk against reward by adjusting the percentage of each asset in your investment portfolio. Maintaining an asset allocation portfolio produces better results. It is one of the most important steps that you should take to reduce your overall risk because different asset classes offer different returns, thereby minimizing the overall risk of inconsistency of returns. For example, along with investing in life insurance, you could invest in gold as well.
6. I will buy health insurance cover
Given the alarming rise in healthcare costs, it is essential for you to get health insurance. This will help you to protect yourself against facing high medical expenses. Your health insurance cover will take care of your hospitalization costs and medical bills. It is better if you buy a floater plan which will cover the medical expenses of your entire family.
7. I will invest in the Sukanya Samriddhi Yojana
The Sukanya Samriddhi Scheme is a savings scheme that was introduced by the government of India in January 2015 to help secure the future of a girl child. Investing in this scheme, gets you a tax exemption. Money saved under this scheme will be tax at the time of deposit and pay out of returns. The accumulated interest will be tax free as well. This investment scheme can be opened by the parents or legal guardian of a girl child.