Financial health check-up

Nine things, once a year

Most people review their investments and almost nothing else. But returns are rarely what determines a household’s financial position over a decade. Whether there was an emergency fund, whether the earner was insured, whether high-cost debt was cleared, and whether the savings rate was adequate matter more, and none of them appear on a portfolio statement.

A financial health check-up is a structured annual look at the whole picture. It takes an evening. The point is not to score well but to find the one or two things that are genuinely weak, because in most households the weaknesses are concentrated rather than spread.

How to run each check

Emergency fund. Count months of essential expenses, not months of income, and confirm the money is genuinely accessible within a day or two. Money in equity is not an emergency fund; money in a five-year deposit is not either.

Life cover. Add income replacement for the years dependants need it, outstanding loans including guarantees given, and goals still to be funded, less assets genuinely available. Then compare with what you actually hold, counting employer cover separately because it ends with the job. See term insurance.

Health cover. Check the sum insured against what a serious episode costs at hospitals you would actually use, not against the premium. Check the room rent clause, because it decides claims. See health and family floater cover.

Debt. Total your EMIs as a proportion of net income. Identify any revolving balance carried month to month, since that is almost always the highest-cost money in a household and clearing it beats any investment return available. See balance transfer for restructuring what remains.

Savings rate. What went into savings and investments last year as a share of income. This single number does more work over a decade than fund selection, and it is the one most people have never calculated.

Asset allocation and goals. Compare your current split against what your goals’ horizons call for, and check whether anything needs de-risking as its date approaches. See portfolio review and goal-based investing. Our portfolio analyzer will map your holdings, and the risk profiler checks the allocation against your temperament.

Tax regime. Which regime suits you can change from year to year as your deductions change — a home loan ending, an insurance policy maturing, children’s fees starting. Recompute rather than assume. See ELSS and Section 80C.

Records. KYC current, nominations updated across every folio and account, bank mandates valid, a will in place, and an asset register your family can locate. Our financial data sheet is built for this and our statements and KYC page has the links. See also estate planning.

What weak results usually look like

Three patterns recur often enough to be worth naming.

Well invested, badly protected. A carefully constructed portfolio, no emergency fund, and term cover of two or three times income. One hospitalisation or one job loss unwinds years of careful investing.

Insured but not saving. Several policies bought as investments, a low savings rate, and no clear goal attached to anything. Premium outflow feels like saving without behaving like it.

Everything except the paperwork. Adequate cover, sensible investments, good savings rate — and stale nominations, no will and no record of where anything is. Fine until it is not.

Taking it further

Run through the nine items yourself; the value is mostly in the honesty rather than in any tool. For a full plan built around your circumstances, obligations and tax position, consider a SEBI-registered Investment Adviser. Where you implement through mutual funds, Rytvae acts as an AMFI-registered distributor paid trail commission by the AMC — you pay us nothing directly.

Frequently asked questions