If you have turned 50 this year, it is important to go through your financial checklist. Assuming that your retirement stage is not very far, it is time to re balance your portfolio.
By 50 years, you might not have enough saved for your children’s higher education or even marriage. Reviewing your health insurance policies is also of importance. It is necessary to evaluate how much you have kept aside for unforeseen medical emergencies so that you can have sufficient funds when required.
Portfolio Rebalancing
Most financial advisors recommend that investors should reduce their exposure towards equities and increase their debt investment as they near retirement. For example if your equity exposure is about 70-80% then it should be reduced to 50% over a period of 3 years. Transfer your funds parked in equities to bank and company fixed deposits, monthly income plans, fixed maturity plans of mutual funds and post office schemes.
If you own more than one property, it is recommended that you lease out the one you don’t currently use. It can be utilized as your source of monthly income. Although they still earn and wouldn’t need it now, it will be a source of a steady flow of income after retirement.
Try avoiding investing in instruments whose lock in period does not extend more than 7 yeas. This will ensure that you will have funds as and when required.
It is observed that, most people coming under this age bracket, prefer to consume their savings by going on foreign vacations and dining in fine restaurants. in such cases, it is best advised to increase your contingency fund by 30-40% especially you are predisposed to a certain medical condition. So it means that, if earlier your contingency fund was large enough to meet 3-6 months, now it would be 6-8 months.
It is very important to involve your wife and kids when you are making a financial plan, so that they will have an idea as to where your money is stashed. It will help your family liquidate those assets at the time of emergencies.
One thing, that must be taken care of is about the fact that, by this age keep your liabilities to about a 10-20%. If you are into debt by taking a home loan or a personal loan etc., it is important to liquidate your assets and repay the entire loan amount, if possible. You can free up the cash from EMIs and accomplish your next financial goal.
Make sure that you have a will, since by this time you might have a good investment corpus. This will simply enable your nominees to stake claim for your assets without any multiple claims coming out from the blue.