Sparks Corporation Singapore Management Services on Becoming More Savvy in Personal Finance
With the year 2017 ’ s entry , we find ourselves pondering upon what we attained in 2016 and , more importantly , what we need to do in 2017 in preparation for the years ahead of us . Breaking it down into its simplest ideas , our efforts must be toward achieving three essential things : Becoming healthier , wiser and wealthier . The steps needed to build our wealth are as follows :
Separate insurance from investment
Majority of people often put off planning their tax and investment requirements until the last few weeks of the financial year . And usually , they try to simplify their difficult problems by getting insurance . They may end up saving on their taxes ; however , they can benefit more from wiser investing . Besides , the common endowment insurance policy provides minimal income and will provide the highest potential for creating enduring wealth . Moreover , the death benefits you get from insurance are not sufficient to address long-term financial needs of your dependents . The better solution is to separate your investment needs from your insurance .
Engage in monthly Investing
You need not equate Investing with getting insurance . Financial experts generally believe that the most effective way to create long-term wealth is through investing in equity , mutual funds , gold , real estate and small savings accounts , such as PPF and Sukanya Samriddhi Scheme . It does not matter how big or small the amount involved or what the investing objective , engage in monthly investing . If you have a couple of thousand rupees or more to invest monthly , do it as early as you can . For instance , invest Rs 4,500 in a mutual fund Systematic Investment Plan which will grow 10 % yearly for 30 years , and develop a corpus of Rs 1.02 crore . However , with only five years left in your life to achieve the same goal , your monthly investment would be Rs 7,500 – or Rs 13,500 with 10 years left . This is all due to the effect of compounding interest rate .
Get term insurance and also ensure dependents
For those with dependent family members , consider getting life-term insurance coverage in the amount of 10- 20 times your present income per year . Less than that figure , for example , an endowment plan , may not cover your dependents ’ financial requirements . Term plans are quite inexpensive and offer many additional benefits , such as premium return and month income . Likewise , acquire a health cover for every one of your family members . This will enable you to save significantly the money you will have to shell out from your pocket in case of medical emergency .
Do tax planning
Avoid going into panic mode at the end of the year , especially when a big TDS occurs in March . Paying tax is a one-year process and everyone has a whole year to figure out what one earned and what to pay . Hence , one needs to maximize the use of that time to determine the best ways to save tax . Section 80 ( C ) of the tax code , equity-linked saving plans and public provident fund can bring higher long-term benefits compared to insurance plans . Likewise , you can save more tax if you get health insurance for you and your dependent parents . Make sure that your figures for home-acquisition loan principal and interest repayments or rentals paid are accurate . In case you are fall short of exemption limits , you need to determine and invest in a taxreducing instrument as early as possible . You can attain efficiency on FDs by not going above the interest earnings limit . Above that limit , invest in debt mutual funds for tax efficiency and bigger income .