As the new financial year begins on April 1, it’s the perfect time to create or update your financial plan for the next 12 months.
The government has made significant changes in income tax rules in this year’s Union Budget, which will come into effect from April 1.
Making adjustments to your financial strategy now can help you optimize your investments and tax savings. Here’s a breakdown of how to approach your investment plan:
1. Review Your Investment Portfolio
The past few months have been marked by volatility in the stock market, with indices like BSE Sensex and Nifty 50 down by 5.5% and 5.3% respectively as of mid-March.
Smaller indices like midcaps and smallcaps have seen even steeper declines. However, post-March 15, the market has experienced a slight uptrend.
Given this volatility, it’s important for mutual fund investors to reassess their strategies and rebalance their portfolios.
Diversify your assets: Ensure your portfolio is spread across different asset classes like stocks, bonds, gold, and international investments.
This diversification can help reduce risk and provide more stable returns over time.
Increase SIP investments: With potential salary increments and favorable market conditions, consider increasing your SIP (Systematic Investment Plan) contributions.
This will help you stay on track to achieve your financial goals.
2. Take Advantage of the New Tax Regime
The government has introduced significant changes to make the new income tax regime more attractive, and these changes will take effect from April 1.
Depending on your income, you could save a substantial amount in taxes by switching to the new tax regime.
For an annual income of Rs 12 lakh, you could save approximately Rs 83,200.
For an annual income of Rs 15 lakh, savings could amount to Rs 32,500.
For an annual income of Rs 24 lakh, you could save Rs 1.14 lakh.
Experts suggest that taxpayers carefully evaluate both the old and new tax regimes to see which one is more beneficial for their individual situation.
This can help you reduce your tax liability and improve your overall financial health.
3. Consider Increasing Your Investment Amount
With an expected rise in income due to salary increments or other financial changes, this is a good time to think about increasing your investment amounts.
Increasing the amount of money you invest in the market now can set you up for better returns in the future.
Be sure to diversify your investments to reduce risk and enhance growth potential.
4. Anticipated Interest Rate Reduction
If you’re planning to buy a house or a car, there’s good news on the horizon. The RBI is expected to announce a rate cut on April 9.
The central bank had already reduced the repo rate by 25 basis points in February, and a further reduction by another 25 basis points is anticipated.
This will likely lead to lower home loan and car loan interest rates, making it more affordable for you to borrow.
Action Steps to Take Now:
Rebalance your portfolio: Adjust your investments based on current market conditions.
Increase your SIP contributions: Especially if you anticipate a salary hike or financial boost.
Evaluate your tax regime options: To maximize your savings in the new financial year.
Consider borrowing after April 9: If you’re in the market for a home or car loan, take advantage of lower interest rates once the RBI announces its policy.
