Money moves that must be avoided before Budget


Personal finance advisors say investors should not react to Budget-related investment tips, avoid trying to time their investments or structure portfolios based on conjectures on what could be announced.

The Union Budget is perhaps the biggest single event of the year tracked minutely by the investing community. Announcements made by the Finance Minister have impact on the entire economy and as such have a large bearing on everyone’s personal finances.

However, as the Budget day nears, investors often tend to take impulsive decision or undertake portfolio moves based on half-baked information or speculations emanating from various quarters.

Yesterday, we told you about some money moves that you must undertake as Budget day approaches ( read here ). Today, we advise you on some of the steps you should avoid doing during the run-up to the coming Union Budget to be presented by Finance Minister, Arun Jaitley, on February 1.

Personal finance advisors say investors should not react to Budget-related investment tips, avoid trying to time your investments or to structure portfolio based on conjectures on what could be announced.

“It is important to understand that only the top hierarchy in the government knows what could be part of Budget proposals and what would not be; everybody else is just guessing. Also, seemingly big events like Budget are build up on huge hopes prior to the event but they’re forgotten a couple of days after they’ve played out,” says Sanjeev Govila, CEO, Hum Fauji Initiatives.

Govila says the following 5 financial planning steps should be avoided before the Budget:

Don’t try to time the markets: Nobody has ever been able to do it. Your belief that you can do it is not supported by historical data!

Don’t wait for the best times to invest, pre or post Budget: The best time to plant a tree was 20 years back and the next best is NOW, and it should be slow, steady and systematic.

Don’t take your decisions based on tips: Advice from TV shows, newspapers and magazines and your pan-wallah should be avoided. They’re all as clueless as you are.

Don’t quibble over pennies: Don’t wait for the ‘best price’ which you have thought of for investing. You may lose big opportunities due to a few paisas.

 Don’t let ambient noise cloud your thinking: Shut out noise and think clearly. Remember that finally it’s your money – nobody but you will get affected if the decision turns out to be wrong.

Anil Rego, CEO & Founder, Right Horizons feels the following things should be avoided:

Do not delay your investments for tax deduction: The Budget has measures for the financial year 2017-18. There will be no impact on your investment requirements for the current financial year. If you have not completed your 80C investments do them now. Delays will just add to stress closer to the financial yearend.

Don’t try and do it all by yourself: Wherever possible, let professional manage your investments, such as through mutual funds. Investing through mutual funds can take the stress out of your life. Leave your investments to those who make investment management their career and have relevant expertise.

Don’t stop your SIPs or regular investments: Continue with your regular mutual fund SIPs as usual. Irrespective of market up and downs due to the outcome of India Budget your investment will be of average cost of purchase in the long run.

Don’t keep all the eggs in a single basket: Diversify your investments across the asset classes; diversification reduces the risk on your investments. Betting on one or two investments based on the probable outcome from Budget may impact your overall financial position negatively.

Do not resort to crystal-ball gazing: Trying to prejudge what the Budget might hold for you could lead you to taking wrong decisions with your money. It is better to have a stable portfolio that is adjusted according to Budget proposals when announced.

By Sarbajeet K Sen

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