5 Key Financial Resolutions for 2022
By Akhil Chugh
Date January 2, 2022
New Year always inspires us to make a positive change in our lives. The start of a new year brings a host of new resolutions – more often than not relates to physical or professional lives. Net Brokers believes focusing on financial health is important as well.
So, let’s talk about some key resolutions that will make an individual financially healthy. These 5 resolutions can help you financially in the long run and benefit you substantially to achieve your life goals.
1. Don’t just save, invest smartly:
Simply saving is an unproductive exercise if you don’t compound it by investing. Saving money is the first step to growing your money. But, simply saving is an unproductive exercise. To create wealth, investors should go further and invest that saving. Wealth can rapidly snowball through compounding. But one will have to invest for the long term to harness the power of compounding.
The only way to grow your money is to invest it in a mix of mutual fund categories as per your risk appetite and investment horizon. However, don’t blindly chase returns. Stick to asset allocation to effectively balance risk and reward in your investment portfolio. Contact Net Brokers team of experts today to design a suitable financial plan for you aligned with your goals and risk appetite.
2. Build an emergency fund:
Having a sufficient amount of emergency corpus can make the difference between muddling through a crisis or falling off a cliff. No matter how much is your salary or monthly EMIs, keeping 5-10% of it in an emergency fund – preferably in liquid and safe investments such as liquid/ arbitrage funds can make a difference in times of crisis.
Investors should make a resolution to have money saved in an emergency fund – 3x monthly income is a good start, 6x Is ideal and 12x would be good to have. Doing so will help you tackle the ebbs of life while you enjoy its flow.
3. Get term insurance and health insurance:
Other than having an emergency fund, having term insurance and health insurance is also essential. Insurance is aimed to help you tackle the ‘uncertainty’ of life. Ever thought about how will your loved ones survive financially in case of your untimely demise? Or how will you pay the skyrocketing medical costs in case of hospitalization? The answers to both these questions are term insurance and health insurance respectively.
If you are married then buy a family floater medical insurance, which will give coverage to your entire family at a low premium. Also, the term insurance amount should be at least equivalent to 10 times of your annual income. So, if you don’t have these coverages yet then make a budget and buy them immediately. If required cut down your discretionary expenses to pay a premium for these insurances.
4. Start tax-saving early:
Don’t wait till the end of the fiscal for your tax saving investment. Of course, there are only 3 months left for FY22, but you can start planning for FY23. If your idea is to save tax under Section 80C via ELSS, then start an ELSS SIP right away. You not only save each month for your tax reduction but also get the power of rupee cost averagi
Contact Net Brokers team today to choose the right ELSS mutual fund for you!
5. Unlock wealth creation by investing in mutual funds:
A mutual fund pools the money of various investors and invests across different investment categories like bonds, money market instruments, stocks, and other types of securities. Mutual Funds can be the most effective medium for enabling investors to access multiple asset classes such as equity, debt, and gold.
Mutual Funds not only involve a wide range of categories and schemes that ensure there’s something to offer for all investors, across different risk appetites and investment horizons, but even their returns have also historically proven to outperform most traditional fixed income instruments like bank FD, PPF, etc, especially in case of equity investments over the long term.
What more? If you wish to do away with the constant worry of timing the market, mutual funds offer the SIP route of investment wherein you can start investing a pre-determined amount at a particular date and frequency (like monthly, quarterly, etc.). SIP inculcates financial discipline, provides rupee cost averaging and can unravel the magic of compounding to create wealth in the long run.
There are so many ways to save your money and grow it. Choose how you wish to do it. The most important part is to abide by your financial resolutions to bring in a healthy change in your money habits.
Whatever your 2022 financial goals are, we at Net Brokers can help you achieve them with our bespoke financial plans designed as per your investment horizon and risk profile.
It is very important to seek the consultation of an unbiased financial expert to help you in your financial planning and investments. With the growing complexities of financial markets and the plethora of funds available in the market from balanced mutual funds to multi-cap mutual funds, it is highly recommended to take help from finance experts of Net Brokers, who can chalk out the right investment plan for you based on your goals and risk appetite.
As you celebrate the start of a new year, think about the ways you can better your financial picture and have something to be proud of next year.
Happy New Year!