Smart Money Moves Before the Year End!
As the year winds down, it’s important to take a look at your financial well-being and make smart money moves that will position you for a successful new year. From tax-deferred investments to paying off debt and retirement savings, making the right financial moves now can save you money, lower your tax bill, and enhance your financial security. Here’s a complete year-end financial checklist to get the most out of your money before the year ends. For more expert insights on personal finance, stay updated with My Finance Gyan.
Maximize Tax-Saving Investments:
One of the most financially savvy actions before the end of the year is to invest in tax-saving instruments. You get to lower your taxable income as you increase your wealth over the long term.
Tax-saving investment opportunities are:
- Public Provident Fund (PPF) – A safe, long-term savings scheme with returns exempt from tax.
- Equity Linked Savings Scheme (ELSS) – High return possibility with the lowest lock-in period for tax-saving investments.
- National Pension System (NPS) – Best suited for retirement planning with extra tax relief under Section 80CCD(1B).
- Tax-Saving Fixed Deposits (FDs) – A secure investment with a 5-year lock-in and tax relief under Section 80C.
- Sukanya Samriddhi Yojana (SSY) – An excellent scheme for parents to plan their daughter’s future.
Pro Tip: If you have not utilized your ₹1.5 lakh limit under Section 80C, invest before the end of the financial year to reap maximum tax benefits.
Clear High-Interest Debts:
Having high-interest debt in the coming year can take a toll on your finances. Prioritize paying off loans with high interest rates.
Prioritize paying off:
- Credit Card Debt – With interest charges as much as 40% per annum, paying off outstanding amounts should be a priority.
- Personal Loans – If you have several loans, debt consolidation to reduce interest rates may be an option.
- Buy Now, Pay Later (BNPL) Charges – Most BNPL offers come with undetectable charges and fines for delayed payment. Clear them promptly.
Pro Tip: Implement a debt snowball approach (payment of smallest dues first) or debt avalanche approach (payment of the highest interest loan first) to achieve the state of being debt-free early on.
Review Your Investment Portfolio Performance:
End-of-year is the ideal time to review your investment performance and rebalance your portfolio according to your financial objectives.
Go through the following section-wise:
- Mutual Funds & Stocks – Look for underperforming investments and make the requisite adjustments.
- Fixed Deposits & Bonds – Cross-verify if they are providing competitive returns.
- Cryptocurrency & Alternative Investments – Consider risk and market movements before investing more.
- Gold & Real Estate – Look to sell underperforming assets for improved prospects.
Tip: Spread your investments among different asset classes to reduce risk and achieve higher returns.
Prepare for Tax Loss Harvesting:
Tax loss harvesting is a clever move to lower your tax bill by selling losing investments to counterbalance capital gains.
How It Works:
- Offload stocks or mutual funds that have depreciated.
- Employ the loss against gains in other investments.
- Invest in better-performing investments to keep your portfolio in balance.
Pro Tip: Tax loss harvesting works best when executed wisely, with a focus on long-term financial objectives.
Increase Your Retirement Savings:
Ensuring your financial future means forward-thinking retirement planning. The sooner you begin, the more wealth you’ll create.
Explore these retirement savings possibilities:
- Employees’ Provident Fund (EPF) – Maximize contributions to avail employer benefits.
- National Pension System (NPS) – Enjoy extra tax savings in addition to Section 80C.
- Atal Pension Yojana (APY) – Best for low-income individuals wanting pension benefits.
- Voluntary Provident Fund (VPF) – Tax-free returns with greater interest compared to FDs.
Pro Tip: Boost SIP amounts in mutual funds to create a strong retirement corpus.
Plan Financial Goals for the New Year:
A good financial plan is the foundation to manage money well in the new year.
Important goals to keep in mind:
- Build an Emergency Fund – Save a minimum of 6 months’ worth of expenses in a liquid account.
- Establish a Monthly Budget – Monitor income and expenses through budget apps.
- Boost Investments – Automate your SIP investments for wealth accumulation.
- Major Expense Planning – Save for house buying, holidays, or university.
Tip: Apply the 50/30/20 principle (50% necessities, 30% discretionary spending, 20% saving) for proper money management.
Last Words:
Taking these clever money steps by the end of this year will assist you in saving taxes, settling debts, firming investments, and ensuring your future. Start adopting these practices today itself to move into the next year financially sound. Further Updates? Subscribe to My Finance Gyan!
