Top 12 Personal Finance Trends of 2021

Let’s look at some personal finance summaries for calendar year 2021 that may also affect you in the near future.

2021 has been a year of hope and financial recovery. After being hit by the second wave of the Covid-19 pandemic, people were looking for financial stability, and to a certain extent, their wish was granted. Out of many events that took place in 2021, we have listed a few that are crucial from a personal finance perspective for you.

Let’s look at some personal finance summaries for calendar year 2021 that may also affect you in the near future.

No hike in repo rate

The year 2021 began with a second serious wave of the Covid-19 pandemic. It was a financially challenging time for everyone. the runs batted in helped the economy by keeping the REPO rate unchanged throughout the year. Interest rates on credit products remained at historic lows. Banks reduced their margin on loan products to attract new customers. The mortgage loan rate was reduced to a minimum of 6.4% per year at the end of 2021.

However, the New Year may see increases in key policy rates. Loan borrowers may have to pay higher EMI if interest rate increases occur.

Union Budget 2021 Relief

Various measures were announced in the 2021 Union Budget to help people overcome the setbacks of Covid-19. The important ones from the point of view of personal finances include announcements of extension on the last date to benefit from the tax benefit u/s 80EEA of the Income Tax Law until March 31, 2022. For people over 75 years, relaxation of income tax filing was allowed, subject to some conditions.

There are only a few months left for prospective buyers to purchase their home if they want to take advantage of the u/s 80EEA benefit. If you’re looking to buy your first home, an additional tax deduction benefit may be an important factor you may not want to ignore.

Capital IInvestment reached new highs

Despite the concerns related to the new waves of Covid-19, the stock market reached a new all-time high during the year 2021. The stock market remained bullish during the year with a few exceptions.

Investors who stayed invested and did not panic and stop their SIPs were rewarded with good returns. The record number of people opening demat accounts in the year 2021 indicates that people are increasingly engaging in direct equity investments.

The New Year can bring many surprises. Investors should remain cautious, stay diversified, post profits from time to time, and avoid investing more than their financial capacity.

FD rates remained moderate

The FD interest rate remained largely at the same level throughout the year. One of the main concerns of most FD investors had been the high rate of inflation. The negative real rate of return caused several risk-averse investors to seek alternatives to FD investments.

If you are a risk-averse investor, you should avoid investing long-term in FDs due to the current market situation because there is a possibility of interest rate increases in the near future. You can use the ladder method while investing in the Fds.

Gold price and contrast rule

The price of gold remained mostly low during fiscal year 2021. The price of gold remained in the range of Rs 45,000/10 grams to Rs 54,000/10 grams during the year, while at the end of the year it is trading at around 49,500 rupees/10 grams. . Gold is one of the best hedges against inflation, but the price of gold remained range bound. Some experts believe that the gold price is currently consolidating at the current level and may make a move in either direction in the near future. If you have a plan to invest in gold, choose SGBs or gold ETFs instead of physical gold to ensure greater security and easy handling.

The rule for compulsory gold stamping came into effect on June 16, 2021. Jewelers with an annual turnover of more than Rs 40 lakh must sell only stamped gold jewellery.

BNPL became a favorite spending tool

Suddenly Buy Now Pay Later (BNPL) became one of the popular credit instruments on the market. Several companies entered the BNPL business during 2021. Consumers who found it difficult to manage their spending after the Covid-19 setback used BNPL for financial relief.

It is advisable to use BNPL carefully. Before using it, check the interest charged by the lender and the maximum term of credit without interest that it offers. BNPL must be used for essential purchases only. Be careful not to fall into avoidable debt. BNPLs will continue to increase in popularity. So, in the New Year, use them judiciously.

Cryptocurrency boom in India

The cryptocurrency remained highly volatile throughout 2021. A huge increase in the total investment in cryptocurrencies in India was reported during 2021. The Indian government indicated that it will soon introduce a cryptocurrency bill that will bring the long-awaited clarity for the investors. in this domain.

Until clarity comes, you should be careful when investing in cryptocurrencies. Unless there is an available law on cryptocurrencies, any investment in them will be highly speculative and put you at risk of losing your money.

Retail Direct Scheme

This scheme was launched by the Reserve Bank of India (RBI) in November to allow retail investors to buy and sell government bonds. This scheme is a comprehensive solution to facilitate investment in Government Securities by individuals. Under this scheme, individual retail investors can open a Securities Gilt Account – “Retail Direct Gilt (RDG)” Account with the RBI.

New RBI Auto Debit Rule

The RBI issued new automatic debit rules in October and required no automatic recurring payments for various services such as phone recharges, OTT bill payments, etc. . The financial institutions had the mandate to inform through a message 24 hours before the automatic debit and allow the debit once the client confirms it.

New electronic filing system by the Income Tax Department

To simplify tax filing, the Income Tax Department launched its new website http://www.incometax.gov.in for electronic filing on June 7, 2021. The initiative was taken to guarantee uninterrupted tax services to taxpayers in the country.

Link your UAN with Aadhaar

The government has extended the last date to link your UAN with Aadhaar to December 31, 2021. It has been made mandatory for employees to avail various services and benefits from their EPF account.
Tax on the Contribution to the FP

The central government announced in its Budget 2021 that interest earned on PF Fund contributions above Rs 2.5 lakh annually will be taxable income. However, this directive will apply to the worker’s contribution and not to the employer’s.

Video KYC Policy

Due to the pandemic and to make things easier for clients, in May 2021, the RBI relaxed its KYC rules and announced that Video-KYC will be considered as full KYC for all new accounts. The decision was made to make it easier for banks to complete the KYC procedure. This is now being used to open new accounts and update the KYC of existing customers.

(The author is CEO of Bankbazaar.com)

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