A last-minute personal finance checklist to help you manage your money wisely in 2023

With the New Year approaching, many of us are busy making resolutions and setting new goals. But your list of new goals is incomplete if you haven’t thought about improving your finances in the coming year. You don’t know how to proceed? Don’t worry, we’ve got you covered.

Wealth management advisors advise investors to diversify their investments across assets such as stocks, debt, FDs (fixed deposits), precious metals and alternative assets.

Instead of tying their investment only to equity in order to fight inflation, it is vital to invest in fixed income instruments. At the same time, investors should prioritize life and medical insurance policies, they said.

And most importantly – whatever levels the stock indices have hit, it is not advisable to suspend the Systematic Investment Plan (SIP) since it is not possible to time the market, advise experts.

“A decade is more powerful than a year, so investors must accept short-term volatility for long-term growth. There could be volatility in the market in any given year, but compounding returns would turn out to be higher over a long period,” says Sridevi Ganesh, co-founder of Chamomile Investment Consultants.

Here are the main investment lessons that can be learned:

1. PPF and insurance: Investment advisers suggest that investors take some basic steps in financial planning, such as opening a PPF (public provide fund) account and obtaining early health and life insurance coverage of year.

“We advise clients to follow some basic steps in their financial planning, such as opening a PPF account, obtaining health insurance and term life coverage. The PPF is the only triple-exempt investment product – contributions are tax-exempt, accruals are tax-exempt and withdrawal is also tax-exempt. In addition, insurance comes before investments, so we advise clients to tick their insurance to be done in January itself. Some clients are nervous given the fear of Covid in China and we advise them to stick to their financial plan and continue with their SIPs,” said Ravi Saraogi, co-founder of Samasthiti Advisors.

2. Asset allocation: Another money lesson worth implementing is to do good asset allocation. It is considered another key tool in the wealth planning arsenal.

“To be successful, asset allocation is important. The past year has seen strong returns for gold, and the prior year has been good for small cap funds. Thus, one should not chase the asset that gave high returns the previous year. Instead, you have to do good asset allocation,” said S. Sridharan, Founder and Managing Director of Wealth Ladder Direct.

But when choosing assets, investors are advised not to run after complicated products.

“Young investors need to keep their investments simple and not chase after esoteric products or complicated portfolios. They should follow structured products instead,” says Renu Maheshwari, CEO and Senior Advisor at Finscholarz Wealth Managers.

3. Don’t suspend your SIPs: Notwithstanding the unprecedented highs hit by stock indices, ie Sensex and Nifty; investors are advised not to suspend their SIPs (systematic investment plans) in mutual funds.

“Pausing your investment is not the right approach. There is no telling where the market is going. No one can time the market and hence no one knows whether it is the peak or not,” adds Sridharan.

4. Investing in fixed deposits (FD): With most commercial banks raising interest rates on term deposits following repo rate hikes to the tune of 225 basis points in 2022, now is considered a good time to invest in the fixed deposits.

As part of asset allocation, investors should reserve a portion of their portfolio for fixed income instruments, in particular term deposits (FDs). And since the interest rates given on the FDs are constantly fluctuating, it is advisable to follow the laddering of fixed deposits (FD).

And regardless of the calendar year change, the financial investment rules, more or less, remain the same.

“To build a winning portfolio, we need to be consistent and disciplined in our approach throughout our investment journey. Whether it’s 2023 or 2033, the rules for earning decent returns will always be the same! Those who invest in bad times will always reap the rewards of good times,” says Amit Jeswani, founder of Stallion Asset.