When it comes to money matters, most of us find self amidst confusion and less clarity. Management of finances is very crucial if you don’t wish to end up wasting your hard-earned money to interest or losses. By careful analysis and research, one can improve their finances significantly. Here are 5 money moves to abide by to improve your finances in 2020.
1. Use a Portfolio tracker
As investors, one often takes a casual route when analysing and understanding our investments and charting out the returns from them. They are only concerned with the capital gains that they have earned from debt and hybrid funds in the financial year so that filing of tax returns becomes easy.
A portfolio tracker is a saviour for investors who are not being able to manage and track their previous investments. Uploading mutual fund statements and NPS statements ensure that all your mutual fund and fixed income shows up in the portfolio.
2. Opt for RBI Bonds instead of Fixed Deposits
With Reserve Bank of India significantly cutting down the rates in 2019, one should opt for RBI Bonds instead of fixed deposits. The borrowers were elated with the rate cut, but the investors having their money in fixed deposits saw their returns going down. With most public sector banks offering a mere 6.25% on fixed deposits for 5-10 year slab, it is certainly not a lucrative deal. Some private sector banks though offer higher rates but one should be wary of investing in them.
Government-sponsored schemes like RBI Bonds, National Savings Certificate (NSC), Senior Citizen’s Savings Scheme (SCSS), PM Vaya Vandana Yojana (PMVVY) are more attractive and bound to have stable rates for sometimes now. The schemes SCSS and PMVVY are limited for senior citizens only and each has a maximum investment limit of up to Rs. 15 lacs.
3. Opt for better loan products
Loans are excellent to meet financial emergencies. One can avail a quick personal loan, home loan, business loan or dropline overdraft loan as per their requirement. With a competitive personal loan interest rate, one can easily get the best deal if they research a bit. The lending sector is at its all-time high. From banks and NBFCs offering a competitive rate of interest, one can opt for a balance transfer to lower their financing cost. It is time to get wiser and smarter in choosing the lender. While most lenders offer their services on their digital platforms, it is advisable to compare different lenders on account of their offerings before finalising the one. Managing loans and loan products judiciously can help in bettering ones’ financial credentials and also opens up avenues for receiving credits in the future.
4. Increase exposure to Mid-Cap Segment
It is time that one drifts from the indices like Sensex and Nifty to BSE Midcap and Smallcap indices. The former indices look enticing and have figured exceptionally well the previous year in comparison to the latter which have seen a downfall. But as per experts, the investors should take their portfolios to the next level from the large caps. If we go by the stats, mid-caps have got higher premiums. And even though these fluctuate a little bit, experts believe that these will shoot back to the highs again and hence one should invest more on mid-caps segment.
5. Don’t keep undue expectations of returns
As investors, we usually tend to keep high expectations of the returns. As the market trend goes by, the returns from equity investments have lowered over the years and are expected to behave the same way in the coming few years. SIP is a great tool to invest your savings but it must be kept in mind that it takes patience and discipline to attain healthy returns over the years. If one expects a fancy 15-20% return annually, then be ready for disappointment only. It is to be understood that returns from equity funds aren’t higher in scenarios where market returns have fallen down too. One should strive for investment options to cater to long term financial goals and not be bothered about the current ups and downs of the market.