5 Things To Do At The Start Of The Financial Year

At the start of the financial year, there are five things to do.

Here comes the new financial year of 2022-2023, which starts now. At the beginning of a new financial year, you can do some things that will make it easier for you to plan your money better.

This is a list of five things you need to do when you start the new financial year:

You need to look at your portfolio’s asset allocation before making any financial decisions in the new financial year, so do this now. You can change your portfolio’s asset allocation if there has been a big change in your portfolio’s asset allocation because of recent changes in the stock market.

Assume your optimum asset allocation for the equities and debt asset classes is 80 percent and 20%, respectively. During a market rally, your portfolio’s equity exposure may increase to 90%. You can rebalance your portfolio to the original asset allocation if you are unhappy with the current asset allocation pattern. You can achieve this by either redeeming your equity investment or increasing your debt investment. The rebalancing exercise aids you in maintaining a healthy balance of risk and reward.

Review your financial goals:

Financial goals offer your investment a feeling of direction. So, if you have financial objectives, now might be a good moment to reflect on your progress toward reaching them. It can assist you in determining whether you are having difficulty achieving a financial goal or whether the cost of achieving that objective has increased. In such instances, you should examine your intended investment amount and develop an alternative plan with your financial advisor.

Review your investment:

While checking your portfolio on a daily basis may not be a smart idea, reviewing your investments on a regular basis might help you comprehend their performance. A review of your investments at the beginning of the fiscal year can assist you identify funds that have outperformed their counterparts and funds that have underperformed their peers. You should think twice about investing in funds that have persistently underperformed their counterparts over the last few quarters.

Tax planning:

Are you looking for a stress-free financial year-end? If you answered yes, you should begin tax planning at the start of the fiscal year. Tax planning in April allows you to assess the amount of money you need to invest and begin investing smaller sums on a monthly basis rather than all at once. Under section 80C of the Indian Income Tax Act, an equity Linked Savings Scheme (ELSS) is a type of equity Mutual Fund that offers tax benefits up to rupees 1.5 lakhs in investment. It is one of the top tax-saving investment options because it creates wealth while also providing tax advantages.

Increase your investments:

 By raising your Systematic Investment Plan (SIP) by a particular percentage each year, you can achieve your financial goals sooner. The optimal time to boost your SIP is at the start of the fiscal year. Increasing your SIP contribution in tandem with a raise in salary will usually help you achieve your financial goals quickly. Furthermore, increasing your SIP in tandem with your salary reduces your proclivity to overspend. You should aim for a 10% increase in your SIP investment per year.

The five things you can do at the start of the financial year are asset allocation analysis, assessment of financial goals, review of your investments, tax preparation, and increasing your SIP amount.

This blog is intended solely for educational purposes and should not be considered personal advice. Market risks apply to mutual fund investments. Carefully read all scheme-related papers.

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