Month: March 2023

Financial mistakes can happen even when you have a wealth plan. 

Money management can be complex. In the roller coaster of building wealth, many people get trapped in the biggest financial mistakes.

Don’t worry. We are only humans. Any mistake can be solved with the right knowledge and tools.

Let’s shed light on some of the common financial pitfalls and how to avoid them.

Get a cup of tea. We have some important decisions to make. 

Common Financial Mistakes And How to Avoid Them

1. Don’t Blindly Follow the Crowd

Doing what others are doing is human nature. You try out a new restaurant because your friends like it. Or you watch a Netflix show because an Instagram influencer recommended it.

Taking recommendations is fine as long as they are benefiting you. 

But you may wanna be careful with your money. 

Your money goals are different from someone else’s money goals. It could be tempting to invest in something your friend benefited from. But the chances of you gaining the same returns as your friend are very low.

Seek opinions from the experts instead of your friends or relatives who may not have your best interest at heart. 

Create a wealth goal for you and your family. Sit with a financial advisor to plan your investment portfolio

2. Stay Away From Get-Rich-Quick Schemes

Have you watched Hera Pheri? Then you must have seen the mess Akshay Kumar creates with ‘25 din me paisa double.’

If it was that easy, everyone would be rich. 

In the world of the internet, scammers are on the lookout at every corner. Even educated people fall for quick-rich schemes and end up losing money. And the reason is, these schemes know how to pitch the idea.

But don’t let them get to you. If a scheme promises unrealistic outcomes, it is probably shady.

Focus on building long-term wealth. Outline a retirement plan. Invest in mutual funds for a long tenure. Build a diverse portfolio by exploring various investment avenues. 

Be patient while your money brings more money.

3. Don’t Keep Your Money Lying in Savings Account

A lot of people don’t want to invest and lock in their money. The primary reason they keep the money in their savings account is- What if I need this money tomorrow for an emergency?

Fair enough. But the drawbacks are: 

• You don’t earn enough returns. 
• You may end up spending more just because you have money in your account.

If you are worried about long tenure, liquid funds, or short-duration debt funds allow quick redemption with minimal exit load. 

Create a separate emergency fund. Make your money work for you by investing it in instruments that better suit your risk appetite and money goals.

4. Trading is Not Investing

You’d think the quickest way to earn money is trading. But it is also the quickest way to lose money.

You will have to be accurate both while buying and selling to earn maximum returns. And the probability of winning won’t be in your favor all the time.  

Nobody can predict market movements accurately. Rather, create a long-term sustainable plan. Evaluate your expenses against your investments. Build a portfolio to support the kind of lifestyle you want to achieve. 

5. Fix Bad Spending Habits

What was the last thing you purchased? Was it value for money? 

Poor spending habits are one of the primary causes of losing wealth. You buy things just because you can. 

Do you really need that extra pair of branded shoes? Or that designer handbag that doesn’t even have enough space?

Separate your wants and needs. Purchase items that you are really going to use. You don’t want to live an extravagant lifestyle that can empty your pockets quicker than you imagine.

Instead, create SIP and set an auto-debit for the first week of the month. Put money in a PPF account or in mutual funds.

Corporate FDs are also a great way to lock your money and earn decent returns. 

Dos of Building Wealth

After discussing the don’t of building wealth, let’s quickly explore the Dos.

1. Set a financial goal that includes your personal expenses, wedding, house, car, education, and retirement. 
2. Start investing early. Benefit from the investment avenues that expand your wealth over the years.
3. Understand how taxation works and invest in tax-saving instruments.
4. Diversify your portfolio to balance the risk and returns.
5. Hire a financial advisor to take the money management load off your shoulders. 

Final Words

Are you taking the right actions to build wealth for yourself and your family?

We hope the above Dos and Don’ts of wealth building will guide you in the right direction. Analyze your finances to find the money mistakes you are making with or without your knowledge.

Financial mistakes are easy to make and difficult to fix. Better to set things right before it’s too late. 

If you need any further assistance, our team would be delighted to help you. Write to us with your concerns, get your portfolio reviewed for free, and plan your next move. 

Explore more personal finance tips.

Time to improve your financial situation with quick financial fixes.

People often procrastinate on exercise, chores, and finances. Things could go out of control before you know it.

We are here to save you from the trouble of being financially devastated. 

When you seek quick financial fixes, you’ll probably come across generic options. Keep track of your expenses, pay credit card bills on time, shut down unnecessary subscriptions, and save more.

While these options are useful, we are going to discuss more effective solutions. 

Buckle up! Let’s set your financial goals straight. 

7 Quick Ways to Fix Your Finances

1. Create a Public Provident Fund (PPF) Account

You can create a PPF account in any bank or post office using net banking. The account activation shouldn’t take more than one working day.

PPF scheme is a long-term wealth-building and tax-saving scheme. It allows you to invest anything between INR 500 to 1.5 lakhs per financial year. The interest rate on PPF can be higher than the savings account and the FDs.

The lock-in period for the PPF account is 15 years. Though you can make a partial withdrawal after 5 years. Or you can get a loan against the PPF account whenever needed.

If you invest 1.5 lakhs in a financial year, you get tax exemption under section 80C of an IT act. 

Put money in PPF before the 5th of April to earn interest on the whole amount throughout the year. 

Read more about the benefits of PPF. 

2. Invest in ETF instead of Physical Gold/Silver

Investing in physical precious metals is very common in Indian households. 

Three primary problems with that are- 1. The making charges. 2. Buying and selling are not quick. 3. Sentimental values attached to it.

Simplify the whole process by investing in Gold and Silver ETFs. Not only is it easy to buy or sell, but you may end up earning more returns. There are no making charges. And you don’t have to worry about keeping them safe or shedding a tear or two when you sell them.

3. Add 10-15 Extra Years to Your Retirement Plan

People often create a retirement plan for 70-80 years of life span. But what if you are blessed with a longer life span? Would your retirement plan cover those additional years?

At the age of 75+, your expenses could be more than what they are when you are 60. 

It’s better to have a longer retirement plan, especially for women. Studies show that women live longer than men. 

Add at least 10-15 extra years into your retirement plan.

4. Get a Health Insurance

Health insurance should be your top priority while fixing finances. Medical emergencies can occur at any time with anyone and can create a huge dent in your savings. 

Without health insurance, you are looking at massive bills. You may or may not have such a huge emergency fund. 

To avoid breaking your funds, get health insurance. Better if you get it in your 20s or early 30s. 

Note- Health Insurance also offers tax exemption on 1.5 lakhs under section 80C of an IT act.

Find our more tax-saving instruments. 

5. Close Multiple Bank Accounts

We have a client who and his wife had ten different bank accounts. Some of them were their savings accounts and the majority were salary accounts.

They realized they weren’t able to keep track of so many accounts. And collectively, they had a lot of money lying around in accounts that they could invest.

Eventually, we asked them to shut the majority of the accounts and keep only two to three. Now they are able to manage their money quite easily. They expanded and diversified their investment portfolio as well.

If you have multiple bank accounts, shut them off. Don’t keep the money in a savings account. Invest it in mutual funds, put some in PPF, or create FDs if that’s what you prefer.

6. Don’t Spend Extravagant

Are you an aggressive spender?

Unhealthy financial habits are the primary reasons behind bad financial health. 

You see money in your account and don’t think twice before spending it. Spending habits can go out of control. And by the time you realize it, you have no money to invest.

To save yourself from poor spending habits- Create SIP and your first transaction after you get a salary should be towards SIP. 

If you have multiple credit cards, enable auto-pay to pay the full amount. Instead of buying unnecessary things, put your money to better use. 

Check out the top 5 financial mistakes to avoid.  

7. Get a Financial Advisor

A professional and experienced financial advisor can help you meet your financial goals and suggest options to fix your finances. 

Having a financial advisor by your side will save you a lot of hassle in managing your money. Building wealth is not as easy. You most certainly would need someone’s help. 

However, be aware of advisors who do not have the appropriate licenses or market experience. Here are a few tips for choosing the right financial advisor. 

Don’t hesitate to dump your financial advisor if they are not on the same page as you. 

Final Thoughts

Building wealth takes years of hard work and consistency. One could ruin it in a blink of an eye if not careful. 

Then it’ll take years to get back on track.

Follow the above easy and quick financial fixes. Most of them can be done in a day or two. Have a clear vision of your money goals and keep following them.

Interested in knowing your risk appetite? Get complimentary portfolio analysis with us and our advisors can recommend investment opportunities to achieve your financial goals. 

March is the month to sort out your personal finance if you haven’t already. The FY 2023-24 is about to end and we have things to do before 31st march. 

We Indians love to keep things for the 11th hour. Ha bhai kar lenge is our mantra. 

But…now we have a few days left to complete financial year-end planning. 

So, keep your laptop handy, we are going to do it right now!

Top 5 Things To Do Before 31st March

1. Link Your PAN to your Aadhaar

First thing first, link your PAN to your Aadhaar if you haven’t done it yet. Failing to do so will make your PAN inoperable in the next financial year.

The easiest way to link the two documents together is via the Incometax Portal.

On the portal, Locate the ‘Link Aadhaar Status’ under quick links on the menu. Enter your PAN and Aadhaar and Click on View Link Aadhaar Status. If it is linked…Congratulations. 

If not, the portal will redirect you to the page to link your documents. You may have to pay a 1000 Rs. late fee. 

Note-> The deadline has been extended till June 30, 2023. 

2. Add Nominee Details for Your Mutual Funds Investments

Adding nominees to your Mutual Funds will only take a couple of minutes. 

Complete the task before 31st March to avoid freezing your investment. You may not be able to transact without the nominee declaration.

Steps to Add/Update Nominee:

• Go to the CAMS Portal
• Enter Your PAN number and Click Next
• It’ll show you the mutual fund investments linked to your PAN.
• Select the one (or all) where you want to Add/update the nominee
• Proceed with OTP verification
• You will come across a form to add one or more nominee details.

The change will get reflected within a few hours. 

Note-> The deadline has been extended till September 30, 2023. 

3. 80C TAX-Saving Investments

Taxation is probably the most tiring task. But you gotta do it to save the tax.

Invest in Tax saving instruments before 31st March to get tax exemption. Our advisors have curated a list of tax-saving investments under section 80C of an IT act. 

Note- If you already have a PPF account, don’t forget to make one installment for the current FY, anything between INR 500 to 1.5L. 

4. File an Updated ITR for FY-2019-20 (ITR-U)

The last date to correct/update the ITR for FY-2019-20 is 31st March 2023. 

If you want to make any changes to your ITR for FY-2019-20, the ITR-U form is for you. You can make the relevant changes and re-submit the form. Though you may come across some late fees during the process.

5. Book Long Term Capital Gains

Long-term capital gains up to Rs. 1,00,000 are eligible for tax exemption. Gains (long-term) over and above INR. 1,00,000 are taxed at 10%.

Here’s how you can lower the tax amount with a strategic withdrawal when close to 31st Mar: Instead of withdrawing all your mutual fund gains at once, make a partial withdrawal – break it into 2 parts. Before 31 st Mar and after 31st March.

For example, let’s say you have invested 10 lakhs and have earned 3 lakhs gain. Out of 3 lakhs, 1 lakh will be tax-free. But you’ll have to pay 10% on the remaining INR. 2,00,000, which is INR. 20,000 if you withdraw all of it before 31st Mar. 

Instead, you can redeem half this financial year i.e. INR. 1,50,000 (in the above example) and pay tax on only INR. 50,000, which is INR. 5,000. Repeat the same at the start of the next financial year. 

By withdrawing the investment in two halves, you only paid INR. 10,000 tax instead of INR. 20,000. 

If you are planning to book profits anytime soon or redeem your investments, make use of this since the financial year is about to end, you can redeem partial investment before 31st march. And the remaining can be done on 1st of April when the new financial year starts.
 

See? That wasn’t so difficult, was it? Enter the new financial year with zero headaches, well-planned personal finance, and new money goals.

Be sure to analyze your investment portfolio to understand tax liabilities. If you have any queries regarding Mutual fund investments, taxation, and better wealth management, give us a call. 

Our advisors will outline an investment plan matching your goals for the upcoming financial years. The earlier you invest, the better outcomes you achieve.

Check out more blogs on personal finance to plan your investments accordingly.