These should be your money goals for 2019

Speaking of which, here is a mental checklist to keep in mind if your finances are as messy as the kitchen after the 31^st night party.

This is the numero uno responsibility you have towards yourself and your family. There is no point thinking of investment if one unfortunate illness is going to take away all the money in one swipe because you were too lazy to get insured. And yes, the office group mediclaim won’t be enough. Go out there and buy yourself an additional health policy. Family floaters are a good idea for your spouse and kids, but insure parents separately. Premium calculations shoot up if senior citizens are insured in the same bundled policy so its best to get a separate plan for them.

Remember to check out ‘Super Top Up’ plans which dramatically increase your insurance coverage by paying just some nominal additional premium.

Term. Term. Term. That’s what you need before any other market linked product. In fact, many personal finance experts feel term insurance is all you need minus the return oriented products. Plain vanilla easy to understand term policies offer a large cover at nominal premiums.

Now a days insurers are also offering interesting add-ons like the accidental death benefit and critical illness covers with term insurance. In fact, you can also get term policies that return the premium if you survive the policy term. I call these products ‘Term with a Twist’ and they are definitely worth checking out.

Declutter your life, and your investments. Consolidate your savings in 7-8 good mutual funds. Sit with an advisor to figure out what’s right for you. And remember to start some allocation to ETFs or Index Funds. They are the products of the future. Infact ETFs have outperformed actively managed largecap funds in 2018.

And there is a huge cost advantage. ETFs & Index Funds carry an expense ratio of less than 50 bps compared to the 2-2.25 percent expense fee charged by actively managed funds. Start thinking about some allocation to passives. Also please remember to ask your advisor tough questions. Don’t be blind. Don’t be lazy. Know the risk profile of your fund – be it equity or debt. Ask the advisor about the underlying portfolio.

And when it comes to debt funds, please remember that fixed income doesn’t mean fixed return. These funds aren’t the same as FDs. They may carry interest rate risk or credit risk or  both. So ask for details before signing the forms.

If you are a salaried employee some form of savings will anyway be happening via the EPFO or the NPS. If you’re not contributing to the NPS, give it a deep thought. The National Pension Scheme has some great tax advantages, offers flexibility with the money being invested and can invest upto half the amount in equity which is a great asset class for meeting a long term goal like retirement security.

Life Is too short. Shorter than we know. I learned it the hard way as 2018 took away a dear young friend in a flash. So yes, don’t be too hard on yourself. Motivate yourself. Reward yourself. But yes a little planning will ensure that your personal profit & loss account is always in the black. Plan the vacation, buy the fancy bike, decorate your home. Just do some basic math before you get to it.

Invest in happiness. Just ensure its not the superficial kind. Your investment will reap rich dividends at a mental, emotional and spiritual level. With those words, let me close this first entry of 2019. It is the New year. May it be brilliant and bright. Here’s wishing a very happy 2019 to all!