Budget 2017: 10 money moves you should make before Budget

Budget-2017

Personal finance advisors say sticking to a long-term plan based on goals would be the best way to deal with the uncertainty surrounding the Budget. 

The run-up to the budget is filled with expectations and speculations on what is likely to be announced by the Finance Minister on D-day. There are news of possible Income tax changes, changes in saving schemes, possible tweaking of the retirement savings landscape and changes in tax treatment of capital market related investments.

But only few in the inner circles of the government know the measures that would be announced by the Minister, Arun Jaitley on the floor of Parliament. Many in the investing community remain uncertain on the moves to take before the budget to ensure optimal returns on their portfolio in the days to come. Some may alter their investment portfolio in the hope of what may be announced.

However, this may not always be the right path to take. Leading personal finance advisors say sticking to a long-term plan based on goals would be the best way to deal with the uncertainty surrounding the Budget.

“Basic principles of investing and financial planning will not alter pre or post budget. This budget especially has so many contradictions that it may not be worth it to take investing positions in anticipation,” says Sanjeev Govila, CEO, Hum Fauji Initiatives says.

Anil Rego, Founder and CEO, Right Horizons, says one must not be perturbed by the pre-budget and advises the investing community to ‘sleep well’. Moneycontrol spoke to Govila and Rego, to bring to you some money moves you should be undertake before the budget. Among other things, both advise maintaining some cash position to have investment flexibility post-budget.

Sanjeev Govila’s 5 prescriptions:

  • Diversify your investments: At different times, different asset classes perform and budget presentation will not be able to change this basic rule. This is akin to putting your eggs in different baskets. Don’t start taking ‘investment positions’ now even if it seems a certainty that budget will boost it. You’ll get adequate time to take that call even after the budget.
  • Remove emotions from investing: What has done well in the past may not do well in future too. In a marathon, flock leaders keep changing all the time and the final winner could be a great surprise. Budget is just one small event in the financial marathon of your life.
  • Maintain cash savings: You should have some cash all the time to take advantage of investing opportunities as and when they arise.
  • Do tons of research: You should do your research till you feel there’s nothing more to know about the investments you are thinking of going ahead with. The more the hysteria built up prior to and post the budget, the more should be the reason for you to be more diligent.
  • Know when to invest in equities: It is time to get into equity markets when everybody is predicting doom and time to get out when everybody is only gung-ho about the future.

 
Anil Rego’s 5 prescriptions:

  • Stick to your financial plan: In the budget, among many other things the government lays out proposals for investments in infrastructure and social development that are long term in nature, some taking several years to completion. Subsequent budgets do not divert from the progress of such investments. Your personal long-term plans ought to remain steady irrespective of the budget.
  • Stay away from rumours: The Finance Minister and his team are not likely to tailor the budget to satisfy rumours of a company or sector enjoying some amazing and profitable benefits. The rumours are likely to have been planted by vested interests seeking a profitable exit – at your cost.
  • Keep some liquidity: Ensure some cash in your liquid fund, or savings account to grab an opportunity that may crop up from budget announcements; it may be in investments or expenses.
  • Prepare a wish list for investment: Research and identify some fundamentally sound stocks. During the possible gyrations in the market from understanding, or misunderstanding some budget proposals some stocks on your list may provide a buying opportunity as it dips. Be ready to grab the gift.
  • Sleep well: Volatility, panic and euphoria are part of market history. Over time quality, both good and bad, have been reflected in stock prices. Ignore noises from pundits – they know exactly as much about the budget as you do; which is nothing. If you have a sound portfolio you can relax. If not, clean out the junk with the budget just being an excuse for spring cleaning.

 
By Sarbajeet K Sen Moneycontrol

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