March is here: Here is your ‘To-Do’ list in the world of investments
March is here: Here is your ‘To-Do’ list in the world of investments?
To achieve your financial goals, you must invest regularly. But you must follow a few rules and regulations. It is not just about linking PAN and AADHAR cards, filing your income tax returns before the due date, or following Know Your Client (KYC) norms. Here are a few more things you should add to your ‘To-Do’ list this March:?
Investments under section 80C?
Investments can cut your tax bill. If you invest up to Rs 1.5 lakh in a financial year in permissible avenues such as tax saver funds, public provident funds, national saving certificate, life insurance policies along with others, then you enjoy tax deduction. Many of us in our busy life tend to forget these investments. As we are in the last month of the financial year, it is high time that we invest in the right avenues and complete our year’s quota. For those investors looking to build a corpus in the long term, tax saver funds make a good investment. Over three years ended 3 March 2023, tax saver funds, technically known as ELSS (equity linked saving scheme) gave 16.48% returns, as per Value Research.?
Minimum contribution ?
Many times we open accounts in public provident fund (PPF), national pension scheme (NPS) or Sukanya Samriddhi Yojana (SSY). Sometimes we buy a life insurance policy with a small premium outgo towards the end of the financial year to fulfill the tax saving limit under section 80C. Over a period of time, our priorities change. Say, we take a home loan and that takes care of tax saving contributions and also gobbles up most of our income. In such a case, many tend to forget their earlier accounts in SSY, NPS and PPF. Investors have to contribute a minimum sum in each of these investment avenues in each financial year to continue with benefits. Otherwise, she has to pay some penalty.?
To avoid a penalty, it is better to contribute the minimum amount. Also pay life insurance premium before the due date, if you value the life cover. Otherwise, such life insurance policies lapse and you do not get their benefits.?
Booking losses?
Many smart investors figure out their estimated capital gains for the year around this time. Say, they booked a good amount of short term capital gains on stocks in the first half of the year. And in the second half the markets started going down, leaving most of their equity investment positions in marked-to-market losses. In such a situation, it is better to sell such stocks held in losses. That way, you book short term capital loss as well. You can repurchase the stock if you have a positive view on that stock. Remember, you can offset short term capital gains with short term capital losses. That way you do not have to pay short term capital gains tax at the rate of 15% to the extent of ‘set-off’ losses. You end up cutting your tax bills, if you act smart and on time.?
Pay advance tax by 15 March?
Many times we have sudden cash inflows in the second half of the year that we have not anticipated. It can be in the form of some bonus payout, some investments doing extremely well or some other receipt that you did not anticipate. Such income inflates your tax liability as well. If you have been investing in equities or other avenues, account for capital gains and resultant tax liability. After you have accounted for tax-liability, do not forget to pay advance tax if it is applicable before March 15. Do consult your chartered accountant well in time. Late payment of tax attracts interest thereon. Many people end up paying such extra money at the time of filing income tax returns.?
While completing all these tasks, you may end up looking at your portfolio at least once. It will reveal a new set of information about your investments and financial goals. If you see too many gaps, they can be discussed with your financial advisors. A portfolio review can be conducted and corrective actions can be taken, if required.?
Smart planning ahead of the financial year end saves you some buck and ensures peace of mind. March is a busy time of the year, but sparing an hour for aforementioned ‘to-do’ actions is worth it. You also need to start preparing for the next financial year soon. But that we will consider later.
?
Disclaimer: Investments in mutual funds and other risky assets are subject to market risks. Please seek advice from an investment professional before investing.??