As the New Year gets underway, now is the time to take action to improve your finances. Here are 11 concrete steps you can start taking right now to make more money in 2019:
Keep Investing
Using SIPs can pay off over the long-run. Markets may see periods of heightened volatility and that should be expected. This volatility may allow investors to rupee-cost average as it may provide opportunities to buy more fund shares at lower prices and less fund shares at higher prices.
Look Outside of Large-Caps
Although large-cap funds may potentially provide a degree of stability, investors need to diversify into other areas as well in order to try to maximize returns while mitigating risk. Managed multi-cap funds, for example,may potentially provide investors with higher alpha. These funds may be more volatile, however, so it is important to keep a long-term horizon in mind.
Look to Save on Interest
Even with new mechanisms in place to make lending more transparent and to benchmark many loan types to the RBI repo rate, borrowers may still be able to save money by shopping around and comparing lenders. Before making a change, you can try to negotiate with your current lender to see if they will offer you a lower rate. If they are unwilling, you can consider taking your business to another lender that may offer a lower rate.
Harvest Capital Gains From Equity Managed Funds
It is important to determine your tax status and if the reintroduction of long-term capital gains for stock and equity funds may affect you. SIP gains may soon become taxable, so it may make sense to start harvesting capital gains now in order to prevent them from piling up.
Consider NIFTY Call Options Instead of Index Funds
Options strategies come with their own unique set of risks and potential rewards. Some strategies can have unlimited risk and investors stand to lose more than their initial investment. The purchase of a long call option, however, has defined risk that is limited to the premium paid for the option. Rather than buying the index fund, you may consider buying December NIFTY call options with a strike price of 5,000. This cal option gives you the right, but not the obligation, to buy the NIFTY index at 5,000 when the option expires in December 2019. The risk of such a position is limited to the premium paid for the option. The option may potentially be profitable if the index moves beyond the strike price in an amount greater than the amount paid for the option.
Consider Short-Term Debt Funds
Long-term debt may be riskier due to movements in interest rates. Focus on short-term debt instead to try to minimize risk while still potentially making a worthwhile return.
Consider Fixed Maturity Plans
Fixed Maturity Plans buy debt securities and then hold them until they mature. This makes their returns equal to prevailing bond yields.
Consider U.S. Focused Funds
U.S. equity markets have been on a decade-long bull run and recently saw a significant pullback. Despite some recent selling, these stocks may still have a lot to offer and can provide additional portfolio diversification.
Consider Investing For a Senior Citizen Parent
For those over the age of 60, interest is tax-free up to Rs 50,000 per-year. This means you can gift them and have them invest in small savings schemes or fixed deposits.
Look at Multi-Year Health Insurance
health Coverage can become expensive, but there is a way to cut the cost. A multi-year plan may offer an upfront discount if several years of premiums are paid in advance. Not only does this type of plan allow for a significant discount, it may also help the purchaser avoid the brunt of higher premiums down the road.
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