March is here – 3 key things that need your attention

The end of the financial year is here and it would pay you well to complete some of the important tasks related to your money and investments.

There are 3 key aspects that you need to do.

#1 Map your Aadhar to your bank accounts, your mutual fund folios.

The current deadline is March 31, 2018. Yes, the deadline has been extended previously and can be done again. But what’s the difference between today or tomorrow. So, better get done with it.

One of the big issues with some of the investors has been the different names in PAN and Aadhar which is causing linking issues. The rectifications can take time and result in delays. Get the corrections done now.

Here’s a detailed note on linking Aadhar to your mutual funds.

#2  Complete your tax savings for the current year

You have time till March 31 to save some tax and complete your tax savings. Make a quick list of the low hanging fruits. These include:

1. Section 80C – PPF, Life insurance premium (term plan), Tax saving mutual funds, etc. Overall limit of Rs. 1.5 lakhs
2. Section 80D – Health insurance premium or health checkup for self/spouse/dependent children (Rs. 25,000) and parents (Rs. 30,000)

Want to know your Personal Tax Quotient. Take this fun tax quiz.

#3 Get rid of unwanted investments, declutter your portfolio and focus it towards your goals.

This got triggered by a recent comment by an investor, who wrote:

I remember a dialogue from the movie Tanu weds Manu-II where Kangana Ranaut says “Haalat dekhi hai? Adrak ho gaya hai ye aadmi. Kahin se bhi badh raha hai!” That’s precisely the state of my MF portfolio 🙂

(Translation: The portfolio is growing from any direction, like a ginger.)

Yeah. I agree with him.

My advice – Prune down the no. of schemes, focus on good risk managers and not just past performance. It is not easy to tell the difference between luck and skill in portfolio management. I would personally prefer good risk managers always, not driven by herd mentality and those who don’t overpay for their investments. If there is a good process in place, returns will come.

Yet another thing that should drive your portfolio restructuring is the LTCG tax. It is almost a reality now. Starting April 1, if you sell your equity / funds after 1 year of holding or get dividends (anytime), you will be subject to a 10% tax + cess.

Remember, any withdrawals from your portfolio will result in a forced taxation, either via Dividend Distribution tax (10.3%) or LTCG tax (10.3%).

I have personally witnessed portfolios with dozens of schemes, dividend options and SWPs running, just for the sake of it. If this is the case with your portfolio too, leading to outflow without the actual need for money, you are creating a big interruption to the power of compounding.

This can hurt your portfolio growth in the long term. Time to sort out this mess is now.

Read more: Dividend – an opium for the investors

All the best!

Finally, there is never an end to learning. Begin with the most important fundamental about investing with Investing 101.

What’s your view? Any personal experience you will like to share? Please do so in the comments.