As 2025 begins, it's an opportune moment to reflect on the year gone by. The start of 2025 is a time not only for celebration, but it is also a time for new resolutions. It is also an important checkpoint to review our financial planning. However, with so many investment options available in the market, it can sometimes be difficult to decide where to start and where to invest. So we have put together a step-by-step guide to help you make smart, end-of-year financial decisions.
Vivek Jain, Head of Investments, Policybazaar.com says, “One of the most significant factors for making investment decisions for most Indians is tax planning. Miss this window and one may end up paying a lot more in taxes than you have to. The other factor is creating an adequate corpus to ensure you are not dependent on anyone during your retirement years. Then there are certain investment essentials that you need to ensure your financial plans are never derailed even in an emergency.”
Term insurance has rightly been deemed as the foundation of all financial planning. While you may have investments that offer returns, nothing beats the safety shield of a pure term plan. These plans are among the simplest but most impactful investments you can make. The size of the insurance cover term plans offer is significantly higher at a very affordable premium. Of course, tax saving is yet another reason to go for it. These plans offer tax benefit of up to Rs 150,000 for premiums paid under Section 80C. Even if you have other kind of insurance plans that offer life cover, don’t forget to opt for term insurance. You can also add riders in these plans to further enhance your policy’s utility.
If you are looking for investments that involve no amount of risk, then guaranteed return plans stand out as a great option. These long-term plans provide fixed returns of up to 7% completely insulated from the fluctuations of the market. The great news is that many of these guaranteed return plans offer dual benefit of guaranteed returns along with the added shield of life insurance. So if the policyholder passes away during the policy term, the insurance component of the plan kicks in to safeguard the family. They get a lump-sum payment to cover their expenses and achieve their financial goals. So while you can build wealth systematically over time, your family is protected as well for an unforeseen eventuality.
If you are not for certainty and are willing to take more risks, then ULIPs, or Unit Linked Insurance Plans, are ideal for you. These plans also offer the dual benefit of insurance and investment. These plans too come with tax benefits. The main difference is that the returns of these plans are market-linked. You can choose plans that invest in equities or debt. You may also choose balanced fund plans that offset some of the risk of the market with certainty of bonds.
Health Insurance: You may have covered your family’s future in case of your death, but what if you or your family goes through a medical emergency. With high cost of medical care, such an incident can also derail your financial goals. So it is must to have a health insurance plan to insulate your financial future from such eventualites. A comprehensive health cover protects you from rising medical costs. It also gives you peace of mind during emergencies.