Things change fast in today's Digital world and even faster in the world of Finance. It was only back in 2007 when the concept of core banking was introduced and NEFT was still finding its footing as an acceptable mode of transaction. Getting insurance was a painstaking task. Mutual funds were only beginning to gain acceptance.
Fast forward 10 years and things like UPI, wallets, insurance, mutual funds all sit nicely packed in a 4G connected device in our pocket. We have an entire bank installed on our phone these days! While technology has made it easier to access and manage information - It is still confusing to keep track of the basic checklist we should all maintain for a healthy financial life. Here goes a list of things everyone must tick off in today's digital world.
1. Apply for and update your PAN and AADHAR. Update your AADHAR with your mobile number and email address if you haven't. It is already becoming essential for navigating through everyday financial transactions and authentication.
2. Get a bank account. Preferably one with a good mobile banking, net banking interface and live with UPI as well. Make sure to have your nominee info updated in your account.
Suggestions: Digibank and Kotak 811 bank are a good starting point for a basic mobile bank. HDFC, ICICI and other full-service banks near your locality can also be subscribed to.
3. Get your KYC done. This may be slightly confusing. Your KYC with the bank is different from the KYC required for investments and other purposes. You can get KYC done completely online at many of the Fund house websites such as Quantum or even through your broker if you have one. This is a one time process that helps you be ready to make investments the next time you want to. You can check your KYC status here.
4. Get Life Insurance. Life insurance is as such a personal choice. If you do not have any dependents, now or in the future, taking a term insurance could be optional. Though most of us who have a family, any loans, etc. are advised to have at least 7x-10x salary as term insurance cover to safeguard against future risks. Do NOT buy any investment plans from the insurance company. Opt for only term insurance. You can get a good comparison at aggregators like Coverfox. Or you could choose to buy directly from the insurance company.
Suggestion: Max Life has good competitive rates, good claim ratio and is going to be merged into HDFC soon while it is cheaper than HDFC policy. There's a good arbitrage that exists here.
5. Get Health Insurance. Health insurance is not optional! The thing about health insurance is - you are not going to get it when you really need it. Also, do not rely purely on company sponsored health plans. They will only cover till your employment, not after retirement. Have a stand-alone health plan as early as possible. You can again refer to an aggregator like Coverfox. While you can buy directly from the health insurance company as well, the price differential is usually not there. Hence, we prefer to buy through a broker than directly through the company.
6. Pay off any high-interest loans. Before any expenses and savings, considering paying off any high-interest personal loans, etc. Student loans and Home loans give good tax benefits and it may be advisable to consult a tax practitioner or an Investment Adviser for the same before paying them off.
7. Pay your bills. Ok, this is kind of logical. However, we usually have at least 4-7 bills that we pay each month, not counting the multiple credits cards banks have sold us over the years. While Paytm and Phonepe would offer all sorts of cash backs on recharges, we prefer bill automation solutions by banks or Billdesk that can take off the entire hassle of tracking and paying our bills on time.
8. Plan you Taxes. Get all the benefits under various section of Income tax act, especially under 80C. While there are many avenues to gain 80C benefits, we like PPF, SSY and ELSS Mutual funds as means to get these benefits.
9. Open an investment account. Get in the habit of investing. Open an account with your broker for investing in stocks. If you plan to invest in Mutual funds only, invest directly with the AMC on their websites or consider a fee only portal such as Expowealth. These days, all these processes are completely online and do not require any paperwork.
10. Plan your asset allocation. Consider having some of your investments in Liquid / Ultrashort schemes for liquidity purpose. Decide your ideal allocation using many of the online tools or through the help of an Investment Adviser. There are tools at Expowealth that can help you with the same.
11. Keep track of your investments periodically. Have the discipline to review your portfolio 2-4 times a year and check if any action required. Do not chase returns and star ratings. Rather, target an ideal rate of return that helps you achieve your goals. Teaser: Launching Soon.
Hope you find this checklist a handy source of tools to manage your money better. Do let us know if you have any suggestions/feedback for the same. You can email us directly at firstname.lastname@example.org as well.
Disclaimer: The author is a SEBI Registered Investment Adviser and acknowledges that many of the views may be personal. Any suggestion of a service is not an endoresement of quality of service of any of the providers. Any individual seeking holistic financial advice is suggested to get in touch with a SEBI fee-only Investment Adviser.