New Year, New Financial Plan

Posted On Thursday, Jan 01, 2015


Here’s wishing you a very happy New Year 2015, we hope you have a wonderful year ahead. While celebrations tend to continue into the first week of January; the New Year is truly a wonderful time to renew / strengthen old friendships as well as to meet one’s relatives.

The previous year – 2014, was quite tumultuous, for the world and for India. From an India perspective, the Sensex and Nifty hitting new highs for most of the year in anticipation of the reform agenda of the new Modi-led government at the centre, the rupee stabilized but at the end of December (the 29th) hit a 13 month low of Rs. 63.6763 against the US Dollar. In addition, the fall in global commodity prices including crude oil would only be good news for India. However the WPI inflation at 0% for the last calendar quarter did lead to some eyebrows being raised as to the authenticity of that number, as we know that commodity prices don’t seem to be falling at the rate indicated by this number.

Anyway the start of a fresh year brings with it a series of promises that we make for ourselves, (most of which won’t even last till the 5th of Jan☺). The most common ones being a longer exercise routine or losing a predetermined amount of weight or even spending more ‘quality’ time with the family. Financial planning, not only for the coming year, but also for many years to come still, unfortunately, hasn’t formed a part of these new year resolutions.

Ideally an individual/decision maker in a household needs to review personal finances like bank statements, mutual fund and equity-related investments and other financial instruments, as to how they did in the previous year and their subsequent plans for the coming year(s). This will not only help you to weed out unnecessary day-to-day expenses, but also help to ensure that your financial assets are deployed in the most productive manner and are geared to meeting long-term goals for self and the family.

You could either do the above task on your own but it would be best with the assistance of a financial planner. The key objective is to streamline your financial portfolio.

Monitoring your personal expenditure
Households have a broad understanding of their monthly expenditure including groceries, medical, children-related and allied daily expenditure. It would be prudent to compare the actual family expenditure incurred with ATM withdrawals / cheques issued, as with multiple bank accounts in a family, this could be a difficult task.

A careful analysis would also permit families including their dependants to weed out unnecessary expenditures from the next year’s budget as well as help them decide savings available for deployment in various instruments.

Listing the portfolio
An individual’s portfolio typically consists of fixed deposits, insurance policies, shares and MF schemes. However, very often there is not much clarity on the total interest received for FD’s during a financial year or the current value of the equity / MF portfolio as well as the dividends received during the financial year. It would be necessary for you to list your portfolio either on an excel sheet or on a white sheet of paper, and different asset classes could be listed separately.

Also the monthly / quarterly financial statements received could be arranged neatly in a file or scanned and kept in a separate folder on the computer, and easily accessible to other decision makers in the family.

Review the investments made
Listing out financial assets would reveal whether there is a concentration of a portfolio in a particular group, whether equity, FDs or other instruments. Depending upon the risk appetite of the investor as well as his financial situation he could take steps to broaden his portfolio to include a suitable mix of mutual fund equity or debt schemesas well as gold and other related instruments. Investing directly in the stock market involves a high degree of risk, and investors are increasingly relying on MF schemes to help grow their savings on a long-term basis. An individual investor would need to pay careful attention to the investment style and pedigree of the fund house as well as past track record vis-à-vis peers and expense ratio.

Also, for investors holding mutual fund schemes in multiple folios, they could, as far as practical, consider consolidating their holdings, as it would make it far easier to track such investments on a regular basis.

Consider new options
A financial portfolio needs to remain dynamic and in tune with the changing economic environment in the country as well as on a global basis. Interest rate policies are subject to change and it directly impacts the earnings from fixed deposit/debt fund schemes for an investor. Similarly, the changing business cycle has an impact on corporate earnings, and an investor in the equity market needs to respond appropriately. However, investors need to consult their financial planner before making any radical change in the composition of their portfolio or making fresh investments. It would be of equal importance to an investor to regularly interact with his financial planner to suitably optimise his portfolio and ensure that the portfolio is moving in line to meeting his long-term goals.

The New Year is a time for joy and happiness, and careful financial planning would help you to enjoy several more of such occasions with equal, if not more, merriment! If you’d like to interact with one of our customer interaction representatives you can give a missed call on 02261073807 and they’ll get back to you. Or you could get to us by one of the ways mentioned in the contact us page.

Disclaimer, Statutory Details & Risk Factors:
The views expressed here in this article are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. Please visit – to read scheme specific risk factors.

Above article is authored by Quantum.

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