I keep saying simplify your financial life…here are some steps (I myself need to take some of them…but gyaan baatnein mein kya hai…)
1. Consolidate all your accounts: Savings bank, Current account, credit card, demat account, brokerage account, life insurance, mutual funds, …first step is consolidate. Once you collect all the papers make sure that only sensible accounts remain, and all the others are closed down. This surely reduces stress of accounts becoming dormant, paying annual fee, etc.
2. Have one print out of all these accounts, but make sure that all your vendors have your email id. Check the email ids are current, and that you go green!! The advantage is that all your financial info is now in one mail id (or 2 mail ids). You could share this with your spouse and even mention the login and password in your will.
3. At least in the Mumbai context one thing sensible to do is to create a Voluntary Deposit Scheme for all your utility payments. Mahanagar Telephone, Mahanagar Gas, Reliance Infra, – the providers of telephone services, gas, and electricity ALL of them accept a voluntary deposit on which they pay 7% p.a. interest. So pay Rs. 20,000 to each of them. Every month they will deduct the bill amount, but they will continue to pay interest on the balance amount. Very convenient and useful because the interest rate is higher than the bank savings account.
4. Make sure that your children and spouse know about all of the above.
5. Pay taxes smartly – make sure you pay all the taxes, and also claim all the deductions.
6. Make your investments as smart as possible. If you are not sure about choosing your fund manager, index your portfolio.
7. Be clear about your RISK taking ability. Generally people OVERESTIMATE their risk talking ability when the markets are doing well.
8. Have your Investment strategy well articulated – obviously written and well understood by your family members.
obviously there are more…but this is not a bad start….
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