A prosperous new year can be a dream come true for each and every tax payer specially if he took a little extra care of his financial planning. Wise financial planning is the modern tool to help the taxpayer to achieve financial bliss, and even enjoy a comfortable retired life. Preparation of a monthly home budget is now a scientific way of life for a modern and smart lady so that she can plan for all her expenses and necessities, while at the same time, not being cash starved at the last week of the month.

Axioms to achieve a sounds financial plan:

Do not put all your eggs in one basket
The first step in drawing up a financial plan is that all the money under no circumstances should be invested in one single mode of investment. This should be the accepted principle to be applied at all times in all situations. From my experience of handling tax and investment matters for nearly four decades, I feel that an investment efficient financial planner should focus on investing the surplus funds of a taxpayer in the following seven groups:

1.   Zero risk investments
2.   Investments in the equity market
3.   Investments in mutual funds
4.   Investments in real estate
5.   Investments in insurance policy and pension plans
6.   Jewellery and other investments.
7.   Risky investment options

The investment in each of the groups would however depend upon the prevailing circumstances in the family. In the group relating to zero risk investments, one should think of those investments which may bring a lower yield but the principal amount of investment does not get effected by any of the market conditions. Bank fixed deposits as also post office monthly income schemes would be the ideal choice for making your zero risk investments.

Do think of venturing the stock market to reap your fruits on investment but only if you have some knowledge or experience. If you are a guy with zero expertise then the only way to explore your investment hunger in direct equity or shares would be to try making investments in IPOs i.e., the new public issues of the companies. It would be a good idea to invest in shares of new companies and then to sell the shares as soon as they get listed in the stock exchange. This will also help the tax payers to make quick money and that too within a short time.

Now coming to investment in mutual funds, the general strategy should be to divide the total amount of investible funds between four or five top mutual funds.

Real estate investment is not that an easy affair, hence to achieve the best result, investment in real estate should be made based on the family needs and other connected circumstances.

Taking out a life insurance policy coupled with some investment in the pension plan should also feature in your investment plan specially to reap the fruits of the investment in old age or at the time of calamity. While planning investments in insurance sector the tax payer in particular should also think of an insurance cover in the name of the spouse. Risky investment proposals should not at all figure in your investment strategy but if you cannot hold on then just invest a maximum of three to five per cent of your total funds in risky but lucrative investment options. You might still be aware of the fate of risky investments made a couple of years ago in teak wood plantations which made the investors burn their fingers.

Now finally, the investment in the form of jewellery including gold and diamond ornaments should be made only on need based situations. For example, if you want to invest in jewellery for use today by your family members, then go and buy the jewellery. But if you are contemplating to buy out jewellery for your small little daughter for her marriage which will take place after ten to fifteen years, then in such a situation it makes no sense right now to buy the jewellery at this point of time. By the time the marriage of your daughter takes place, the design and fashion would change and thus you would again be required to spend money by way of remaking charges. Hence, invest in jewellery but only on need based basis and not purely as an investment.

Invest systematically
One of the best theme of financial planning is to resort to SIP which means – Systematic Investment Plan. This concept can be implemented for your investment in mutual funds whereby every month you go on depositing a certain amount with a mutual fund. The SIP can be tailor made based on your income and available funds from time to time. For women, the proceeds of kitty money can be fruitfully used for an SIP.

Don't stand guarantor
From the financial planning point of view it is suggested and the woman tax payer should never be a guarantor in the loans etc., taken by the husband and his business associates. Many families in the past have been ruined due to this. 

The author, Subhash Lakhotia is tax and investment consultant at New Delhi for the last over 35 years. He can be reached at subhash.lakhotia@moneycontrol.com.