Financial Planning for 2023 – Financial Planning for New Year: We have come to the last stage of the current year. This is the best time to learn skills for better financial planning for the new year. Standing at the end, we should remember the events that happened during the year. In 2022, many incidents like cryptocurrency crash, retrenchment of employees, fear of market recession, rising inflation, economic instability, geopolitical unrest took place. The fear of recession kept hovering over people all over the world during the current calendar year. As a result, this year is going to give us a lot of financial planning lessons. Some of the important things learned during the year are mentioned here. By learning from the lessons learned from the past year, we can use it in the new year.
Cryptocurrency Crash : Stay Away From Irregular Investments ( Financial Planning for 2023 )
Cryptocurrencies have created a lot of buzz during the current year. It gave the benefit of higher returns to the investors in a very short span of time. This was the reason why crypto became very popular among the youth. Being a means of unregulated investment, cryptocurrency has been very risky. The huge fall in the value of cryptocurrency hurt investors around the world. And experts related to this investment instrument also got more lessons about the risks of cryptocurrency.
Adil Shetty, CEO of BankBazaar.com, says that an important lesson learned from the cryptocurrency collapse is that all that glitters is not gold. He told that you should prepare to invest your savings only in the instrument or scheme about which you have clear information. Shetty further said that one must keep in mind the risk appetite and the target before investing in any instrument.
Volatile Equity Market: Long-term investment with patience yields great rewards
During the first half of this year, the sharpest decline was observed in the stock market. Amid rising uncertainties due to geopolitical unrest and negative trend in the market, many investors dumped their holdings. But in the second half, there was strength in the stock market. Due to the better trend, the market once again achieved its peak level. As a result, despite the volatility, the investors who had saved got the most in the second half. This year has given us a lesson that if the ups and downs in the market continue, then it is very good to invest in such a situation. During this, the longer the period for which the return is made, the more the possibility of getting the reward remains.
Interest Rate Hike: Save by paying off the loan amount before tenure
After stability for the last two years, this time from May 2022, banks started increasing interest rates. So far banks have increased interest rates by 225 basis points. Due to which the loans became costlier and the EMI ie monthly installment also increased. The interest rates increased by the banks started stinging the new and old customers taking loans. In fact, the increased monthly installment and interest rates increased the burden of the borrowers. This situation gave a lesson to repay the loan ahead of time. Also taught the skill to counter the increased interest rate on the loan. Apart from this, a lesson was also learned about how the expenditure on interest can be reduced by repaying the loan amount before the loan tenure.
Rising inflation: Increase your purchasing power with investment
This year’s inflation increased the monthly budget of many households. In fact, the goods used to meet the daily needs of the family have become very expensive. This situation taught a lesson that how important it is to invest to increase purchasing power. Review the scheme you have invested in and convert your capital into a growth oriented investment scheme. Do not rely only on your savings to meet your needs.
Rising FD Rates: Invest in FD for better returns
Loans have become very expensive this year. During this, banks also increased the interest rates on their FDs. Till December 2, around 38 banks offered 7% or more interest on FDs of their selected maturity. The increased interest rates can be availed on FD. This year gave a lesson that when the interest rates on FD are high, then you can take advantage of higher returns on your savings.
Layoffs: Create an emergency fund to meet the challenging situation
In the past few months, fears of a recession have led to layoffs across the globe. A challenging situation arises on being fired from the job, in fact the income stops at such a time. Emergency fund proves helpful in reducing the effect of adverse situation arising due to retrenchment. This situation gave a lesson that a person should prepare for an emergency fund in advance to cover at least 12 months of expenses. The easiest way to do this is to start depositing a small portion of your monthly income in a savings account or recurring account from the very beginning of your career. Also, ensure that you have purchased the necessary insurance cover in advance to protect your savings from drowning in case of an emergency.
Despite the best preparations, when it comes to financial planning, some or the other mistakes can happen from time to time. But, by learning from these mistakes, improvements can be made in planning for the future. A lot of ups and downs were seen in 2022. Lessons learned from this year will help us in better financial planning in the new year.
Financial Planning for 2023 – LATEST NEWS