Financial Resolutions for 2015

Resolve to take these steps that can make you a better investor and improve your finances.
New Year, New Resolutions

The start of the new year is often seen as a time to let go of the past and start on a clean slate. As we get ready to usher in 2015, here are a few measures that could make you a better investor and improve you finances in the new year. Even if you manage to keep 4-5 of these dozen diktats to yourself, you will find financial success in 2015.

I will start investing in direct mutual funds
Direct plans of mutual funds are cheaper. On average, the investor in a direct plan of an equity fund pays 50 basis points less in annual charges compared to a regular plan. Lower costs mean higher returns for the investor. The difference is smaller (about 15 basis points) in case of debt funds.

I won't buy an insurance policy I don't understand
Life insurance plan can be complicated products. Some give large covers, others act as savings instruments. Some charge premium for the entire term, others for a limited period. some offer cover for life, others till a certain age. Some pay at regular intervals, others give out a lump sum. Each policy has its own utility. Understand your needs and then buy a policy.

I will learn to file my tax return
Filing you tax returns is not rocket science. Even someone with basic knowledge of taxation terms can do it himself. Tax filing portals have made the process easier by dejargonising the tax forms. For a small fee, they even check your tax return for mistakes and guide you on best ways to save tax. Drop your aversion for this annual ritual and file your return yourself this year.

I won't shy from stocks nor invest too much in them
The year 2014 saw the Sensex touching an all-time high. While this was good news for stock investors, many retail investors regretted that they were not fully invested. Don't shy from stocks in the New Year but don't also go overboard when investing in equities. Just stick to your asset allocation.

I will review my portfolio and re-balance if necessary
Studies have shown that in the long term, maintaining the asset allocation of the portfolio yields better results than earning high returns from an asset class. Re-balance your portfolio at least once a year so that it regains the asset mix you had planned for yourself.

I will not invest in equities with a short-term horizon
Equity was the flavor of the season in 2014 and some experts have predicted that the best is yet to come.However, stock indices will not move in a straight line from here. The mood may be bullish but there will be lots of ups and downs. Don't invest in stocks if you have an investment horizon of less than 3-4 years.

I will assess my health insurance needs and buy a cover
Healthcare has become very expensive and even a short stay in the hospital can leave you with a bill running into six digits. The only way to safeguard your finances against medical expenses is by taking adequate health insurance. It is best to buy a floater cover for the entire family.

I will learn a new skill to enhance my career prospects
The job market is a jungle in which only the fittest will thrive. Hone your skills or learn something new to stay ahead of the herd and make yourself indispensable at the workplace. Not only will you be in demand from other companies but your own company will leave no stone upturned to retain you.

I will renegotiate my home loan or search for better rate
It is widely expected that interest rates will decline in 2015 but the reduction will not be uniform across lenders. Look around for the best rates for long-term loans and switch to a lower rate if possible. If the loan has more than seven years to go, even a small reduction in the interest rate can save you a neat packet.

I will actively look for a job that suits my profile better
Are you unhappy, underpaid or just plain bored with your job? If this is the winter of your discontent at the workplace, update your resume and start searching for a better job in 2015. The job market is buzzing with offers and the sky is the limit for the right candidate. Step out of your comfort zone and turn proactive.

I will get rid of poor performers in my portfolio
Equity funds gave spectacular returns in 2014, with some doubling your money in 12 months. But some funds turned out a pathetic performance. Despite the Nifty rising 30% and some funds shooting up 45% during 2014, some large cap funds rose by merely 20%. It's time to give such laggards the boot and shift your money else-where.

I will not let other goals impinge my retirement
Your child's education, a new car, a second house in the suburbs--don't let your other goals crowd our retirement planning from your financial plan. Whether you like it or not, one day you will retire. While you can take a loan for all other goals, it won't be possible to take a loan to fund your retirement.
New Year, New Goals

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