Thread by @ETMONEY

The start of the financial year is the best time to organise your finances.

Why?

Most changes in #tax & investments are implemented from April.

Starting early gives you time to deal with them. But how do you go about it?

Take care of 5 simple tasks (Check image)

A thread 🧵

𝟏. 𝐄𝐯𝐚𝐥𝐮𝐚𝐭𝐞 𝐎𝐥𝐝 𝐀𝐧𝐝 𝐍𝐞𝐰 𝐓𝐚𝐱 𝐑𝐞𝐠𝐢𝐦𝐞𝐬 𝐓𝐨 𝐒𝐚𝐯𝐞 𝐓𝐚𝐱

We’ve had two tax regimes since 2020–the Old and the New.

Budget 2023 has sweetened the New Tax Regime.

But where can you save the most tax?

There’s a simple way to analyse it. 👇

Picking a tax regime is easier if you know your total deductions and exemptions.

Add all deductions & exemptions you availed last year as a reference.

These include 80C, interest on a home loan, HRA, LTA, etc.

Use the table below to evaluate which regime can save you more tax.

In the New Tax Regime, you don’t need to make tax-saving investments.

Don’t let the money you used for tax-saving investments sit idle if you opt for the New Regime.

Divert it into other investment avenues.

Takeaway...

If you opt for the New Tax Regime, you will need to be more diligent about investing.

And if you pick the Old Regime, start making your tax-saving investments early.

𝟐. 𝐑𝐞𝐚𝐬𝐬𝐞𝐬𝐬 𝐘𝐨𝐮𝐫 𝐄𝐦𝐞𝐫𝐠𝐞𝐧𝐜𝐲 𝐂𝐨𝐫𝐩𝐮𝐬

It should be 6 to 12 months of your expenses.

Your monthly expenses could be higher due to inflation.

Over the course of the year, ensure you add funds to the emergency corpus to achieve the target amount.

𝟑. 𝐑𝐞𝐯𝐢𝐬𝐢𝐭 𝐋𝐢𝐟𝐞 & 𝐇𝐞𝐚𝐥𝐭𝐡 𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞 𝐑𝐞𝐪𝐮𝐢𝐫𝐞𝐦𝐞𝐧𝐭𝐬

Figure out if you are adequately insured

A rule of thumb is to have life insurance 10-15 times your annual income

Go for term plans only, as they help you get high cover at a low premium

You should have your own health insurance.

Don’t rely on the one that your employer provides you.

A family of four must have at least Rs 10-15 lakh cover.

Many insurers allow you to increase the sum insured at the time of renewal.

The other option is to go for a top-up.

𝟒. 𝐎𝐩𝐭𝐢𝐦𝐢𝐬𝐞 𝐘𝐨𝐮𝐫 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐏𝐨𝐫𝐭𝐟𝐨𝐥𝐢𝐨

Are you invested in too many funds/stocks?

Is the quality of your portfolio good?

Is your portfolio geared toward your goals?

It’s time to take a good, hard look at it.

Ideally, you can achieve your goals with about 6-7 funds.

If you have too many schemes, reduce them tactfully.

Keep taxation in mind when you do this.

𝟓. 𝐈𝐧𝐜𝐫𝐞𝐚𝐬𝐞 𝐘𝐨𝐮𝐫 𝐒𝐈𝐏𝐬

Around this time, many of us would be getting a pay rise.

Don’t forget to increase your SIPs too.

That will help you achieve your goals faster and build a larger corpus.

Here’s an example 👇

A monthly SIP of Rs 10,000 for 30 years would give you Rs 3.53 crore (if your annualised returns are 12%)

If you increase this SIP by 10% annually, you will get Rs 8.3 crore.

That’s more than twice.

So, don’t underestimate raising your SIPs.

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