Financial Planning for FY2020-21: Know The Smart Money Moves for 2020

With the world still reeling under the effects of Covid-19 pandemic, the new financial year has dawned upon us. Needless to say, it hasn’t begun on a good note with a meltdown in markets, halt in economic activities and predictions of recession.Having said that, financial planning coupled with these smart money moves in the new fiscal, can help you fortify your finances in the coming days and help tide the crisis.

Portfolio analysis during these pressing times is a difficult task. With most investments in deep-red, the feeling can be pretty nervy. However, understand that even principally sound stocks have taken a beating in the past few months, and they will be the first one to bounce back when markets rebound.On the other hand, fundamentally weak stocks have nosedived further with the bear crashing in. Hence, during financial planning in the new fiscal identify these laggards and weed them out. Also, note that some of the best stocks are available at pretty attractive valuations now, and it’s a good time to add them to your portfolio.

A vital lesson taught by COVID-19 is to be prepared for an emergency, and build a contingency fund for the same. With salary delays and job losses seemingly a harsh reality, a contingency corpus could turn out to be a boon.Sustained and disciplined investments in a mix of market-linked and fixed-return instruments can help you build an emergency fund that can help you tide pressing times.

Given the hardship faced by the common man because of the ongoing crisis, the Government of India announced several relief measures. While it has announced a relief package worth Rs. 1.7 lakh crore for the poor, the Reserve Bank of India (RBI) has given a three-month moratorium on loan EMIs. Also, the time for tax-saving investments for FY 19-20 has been extended till June 30, 2020.During financial planning, it’s crucial to read the fine print of the Government’s announcement. For instance, you shouldn’t consider loan moratorium as loan waiver. If you are paying EMIs and have money to pay the same, it’s better to pay off the EMI rather than deferring it.Note that if you don’t pay your EMIs, the amount gets added to the outstanding principal, and you might end up paying a higher rate of interest. Therefore, if you are not facing any severe liquidity crunch, you must try to pay off your EMIs. The final word During financial planning, take into account your life and health insurance needs and make the necessary changes, if needed. In case you get stuck, take help from a certified financial advisor.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.