The end of the year is an opportune time to review one’s financial situation and retirement portfolio. It is one resolution that financial experts advise all individuals to adhere to, and this can lead to achieving financial freedom within the desired time frame.
Anup Bansal, chief investment officer, Scripbox, said, “One can start with a review of the expenses in the year gone by and accordingly adjust the expense requirements at the time of the retirement. This process will help get more accuracy in the corpus requirement at the time of retirement, especially if the time to retirement is long. Savings requirement changes will automatically follow any changes in the retirement corpus. Any other goals may be reviewed at this time because changes in goals may impact savings required and allocation to the retirement portfolio.”
Asset allocation
According to experts, equity markets have gone up significantly in the last 18 months. So, it is likely that your portfolio asset allocation would have deviated from the desired allocation. Asset rebalancing will restore the balance between risk and non-risk assets. Historical data shows that periodic rebalancing of assets enhances overall portfolio returns. It is also an opportunity to exit non-performing investments and redeploy capital towards assets that are undervalued.
Tax-loss harvesting
“Since there are three months left for this financial year to end, an analysis of capital gains could help in formulating tax-harvesting strategies. The tax-harvesting strategies may include incurring short-term losses, gains, long-term losses, gains, considering previous years’ loss carry-overs to optimize on the tax outgo during the financial year,” said Bansal. Also, you should factor in the long-term equity capital gain up to 1 lakh is tax-exempt.
Experts say it is always good to think about the purpose of the money in one’s life, changes on the work front and desired changes to one’s personal situation. These will indirectly impact the retirement goal and the retirement portfolio.
