We are in a new financial year now and it is the perfect time for individuals to reflect on financial goals, make investment resolution and plan finances. With the right strategies and tips, one can set the foundation for a prosperous financial year ahead. Here are some investment resolutions that can help individuals to achieve financial goals in this financial year:

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Create a financial plan

A well-defined financial plan is the foundation of a successful investment journey.

"It should outline short-term and long-term financial goals, risk tolerance, investment horizon, and asset allocation strategy. Creating a financial plan helps individuals stay disciplined and focused on their investment objectives," said Rajat Tiwari, Credit Vice President at JP Morgan Chase Bank.

Diversify investments

Diversification is the key to mitigating risk and maximizing returns.

Tiwari said that it's important to spread investments across different asset classes, such as stocks, bonds, real estate, and gold, to reduce the impact of market volatility. Diversification helps in minimizing risk and optimise returns over the long term.

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Invest in tax saving instruments

Tax laws offer various investment avenues that provide tax benefits. Investing in tax-saving instruments, such as Equity Linked Saving Schemes (ELSS), Public Provident Funds (PPF), National Savings Certificates (NSC), and Employee Provident Funds (EPF), can help individuals save taxes and build wealth simultaneously.

Stay invested for long term

The power of compounding works best when investments are allowed to grow over the long term.

According to Tiwari, instead of trying to time the market or chasing short-term gains, it's important to stay invested for the long term and let the investments grow steadily.

"Patience and discipline are key virtues for successful investing," Tiwari told CNBC-TV18.com.

Echoing similar views, Rupansh Ashwani, Founder and CEO at AGASS said that investing is not about timing the market but rather about time in the market.

"To maximise gains while minimising risk, focus on long-term investing and avoid making impulsive decisions based on short-term market fluctuations. The key to successful investing is not to follow the herd but to do research and make informed decisions. That way, one can identify opportunities that others may have missed," Ashwani told CNBC-TV18.com.

Review and rebalance portfolio

Regularly reviewing and rebalancing the investment portfolio is crucial to ensure that it remains aligned with the financial goals and risk tolerance. Market fluctuations and changes in personal circumstances can impact the portfolio's performance, and timely adjustments are necessary to optimize returns.

Build an emergency fund

Having an emergency fund is essential to tide over unexpected financial emergencies, such as job loss, medical emergencies, or unforeseen expenses.

Tiwari said that it's advisable to set aside at least 3-6 months' worth of living expenses in a separate emergency fund that can be accessed easily.

Consider risk

According to Ashwani, risk and reward are two sides of the same coin.

"To maximise gains, one should take some risk, but not too much. Find the right balance by diversifying portfolio and invest in quality companies with a strong financial position," he said.

"Investing is not a game of luck, it's a game of strategy. To minimise risk, one needs to have a clear investment plan," he added.

In addition to setting investment resolutions, effective financial planning requires careful consideration of various factors. Here are some tips and tricks that can help one to plan finances:

Budgeting

Creating and maintaining a budget is crucial to keep track of expenses and ensure that spending is in line with income. A budget helps individuals allocate funds for savings, investments, and expenses in a disciplined manner.

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Saving and investing

According to Tiwari, saving and investing go hand in hand. It's important to save a portion of income and invest it in appropriate investment avenues to build wealth over time. Saving and investing consistently, even if it's a small amount, can yield significant results in the long run.

Manage debt effectively

Managing debt is crucial for financial planning.

"Avoid unnecessary debts and pay off high-interest debts, such as credit card debts or personal loans, as early as possible. If you have multiple debts, prioritize them based on their interest rates and create a debt repayment plan. Make extra payments towards the principal amount to reduce the overall interest burden," Tiwari told CNBC-TV18.com.

Controlling expenses

Keeping expenses in check is essential for effective financial planning. It's important to differentiate between needs and wants and avoid unnecessary expenses. Cutting down on discretionary spending and being mindful of expenses can help individuals save more and invest better.

Insurance planning

Having adequate insurance coverage is crucial to protect oneself and family from unforeseen events. Whether it's life insurance, health insurance, or property insurance, it's important to assess insurance needs and choose appropriate coverage to ensure financial security.

Retirement planning

Planning for retirement is a critical aspect of financial planning. Indians should start planning for retirement early and consider factors such as inflation, lifestyle expectations, and post-retirement expenses while estimating retirement needs. Opting for retirement-specific investment options such as the National Pension Scheme (NPS) can provide a reliable source of income post-retirement.

Seek professional help

Seeking professional financial advice can be immensely beneficial for effective financial planning. Financial advisors or planners can provide personalised guidance, help assess risk tolerance, and suggest suitable investment options based on an individual's financial goals and circumstances.

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First Published:Apr 11, 2023 3:14 PM IST