Friday, Jan 10 2020
Source/Contribution by : NJ Publications

1. When Buying Insurance, focus on sum assured
Don't fall for policies giving you 10 times insurance cover. They are all expensive investment products in the garb of insurance. Check the Sum Assured Amount whenever you buy a policy. Prefer a term plan in Insurance. The approx cost of 1 Cr term plan for 30 year old is approx Rs. 7000 only.

2. Increase your sum assured
Increase your insurance coverage. Ideally your insurance amount should be Equal to 10 times of your annual income. Calculate your total sum assured from all your current policies and buy the difference amount before your birthday this year (it will save you some cost). Buy a term plan.

3. Pay a fee to get good advice, be it for taxes, insurance or investments
Nothing comes for free in the world. A good advisor knows his job and financial products better than you. Pay fee to get good advice, though it might pinch you now, but it will be definitely much cheaper in the long run. When you pay a fee for a good doctor, a good interior designer or a good lawyer simply to get best service and right advice, apply the same logic to your financial transactions too.

4. Mediclaim – increase your cover by 10% every year
Many of us are still stuck with old health insurance policies where we haven't increased the cover for many years. Go for minimum health insurance coverage of Rs. 10 Lac, ensure all your family members are covered (cost is going to be highest for your old parents, but that's where the chances of claims are also high). Think of your premium as 10 year investment. Even if you have to go through one big medical emergency in next 10 years, god forbid, it will still be worth it.

5. Check your nomination in investments and insurance
Do you know, post your death what will happen to your bank accounts, investments, who will get the insurance amount ?? If you have not filled up a simple nomination form, your family will be running from pillar to post to get the paper work completed just to prove that they are your legal heirs. To avoid all the hassles, just ensure that all your bank accounts, investments, bank deposits, insurance etc have proper nomination done.

6. Pay Credit Card bills on time
Never delay your Credit Card Payments. Never withdraw cash from your credit cards. You are charged upto 3.5% interest per month on it, which 42% annual rate of interest. If you are short of money or need funds for short term, better to go for Loan Against Securities (against your MF/Shares) which is available at 11-12% interest or go for personal loan at 14-15%.

7. Restart your SIP closed last year
If you had closed your SIP last year fearing market volatility or by looking into negative returns, time to restart it again. If possible, try to invest the amount of missed instalments together. Market down turns are the best times for SIP's to accumulate units. Do your SIP for 10-15 years, invest in it and forget it.

8. Increase your SIP
With your next salary hike, increase your SIP amount. Larger the SIP investments now, higher will be the wealth created in future. Higher SIP amount brings you closer to your goals. Make it a habit of increasing SIP amount every year.

9. Don't check your MF portfolio daily
If you have invested for long term, there is no point in checking your portfolio daily. All the gains/losses which you see daily are on paper. They will turn real only when you exit your investments. If your time horizon is for 5-10-15 years, what's the value of your portfolio in 2020 or in 2021 really doesn't matter.

10. Write down all your investment details at one place. Share with your spouse.
You might have different investments done though different advisors, or some insurance policies bought through banks, some tax saving investments made many years back or 5 different bank accounts. Write it all down at one place with bank a/c number, policy number, folio number, investment amount and all other relevant details. Put name of contact person for each investment. Just think of a scenario, that if something happens to you, ypur family won't even be aware how much money they are going to get.

11. Make your will
Just take a plain paper. Write down details of all your assets and liabilities and share a copy of that with your spouse or any other trusted family member/friend. WILL is not something which we make only when we grow old. Remember, all of us know our birth date, but none knows their death date. A WILL will ensure your assets are distributed to your family members in the way you wish with minimum fuss during legal procedures.

12. Stop worrying about your MF returns
Your Mutual Funds are giving low returns?? you are worried, want to switch your investments ?? A simple way to get over this is stop worrying. Let the investments be. Equity Mutual Funds, deliver superior returns over long term periods of 10-15 years. Just stay invested and keep patience. Chopping and churning will only dilute your returns and you might lose the opportunity when markets jump back.

13. Make your Financial Plan
Sit with your advisor. Make your Financial Plan. Will give you clarity, what amount is needed by you when in the future and how can you invest in the right way to reach it. Make your plan and stick to it. Consult the advisor once/twice a year to update the status of the plan.

14. No need to own more than 1 residential property
Investing in property is a big NO. Buy 1 for yourself where you will be living. For additional money, invest in Financial Products like Mutual Funds, they give you more transparency of valuation, with high liquidity your money is available to you in 3 days (whatever be the amount, whatever). Even if you need regular income, you can get it through the SWP option. No need of lengthy paperwork of real estate, taking care of maintenance expense of the property, searching for a good quality lessee etc. And its highly tax efficient too!

15. Complete your tax related investments/insurance in Jan
Don't wait for last week of March for completing your tax investments. Do it in Jan for this year and for next year try to complete by June 2020 rather than waiting till end of the year.

16. 0 Cost EMI
Deal with it carefully. Buy only the products which you need at 0 cost EMI. If you can afford to buy by paying full amount always better to get benefit of 0 cost EMI. If not, don't fall into the trap of 0 cost EMI. Ultimately you have to pay it off and you may end up with not much needed expensive products, just because it was available at 0 cost EMI.

17. Open bank account for your kids and pay them pocket money in that
Teach your kids about finances. What better way than having their own bank account, their own ATM card. Give them freedom to use money (to the extent of their pocket money). Wise lessons are learnt only by practising.

18. Go Cashless
Use less cash this year. With wallets and UPI BHIM QR codes being accepted all across you can easily afford to go cashless. Saves you from lot of hassles of cash handling and visits to ATM. Also its absolutely safe, secure and easy.

19. Pay off your loans
Make it your first priority to pay off your outstanding loans. If you are having both loans and investments together, it's always better to pay off the loans and feel the relief rather than leveraging yourself.

20. No share trading
Stay away from share trading. Remember that the person who makes most money in share trading is the broker. If you want fun and excitement in life go visit a casino or a theme park like Imagica or Universal or Disneyland. Money making is not so easy as it looks like in share trading. If it was so rewarding, share traders would be world's richest people.

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