As the year draws to a close, its time to pull out those party shoes and play host to the New Year. It’s also time to pause and retrospect on the year gone by, review mistakes and resolve not to make them in the coming year.

While you may have already made your New Year resolution, here are some must-haves on the list - at least money wise.

1. I will prepare a budget for the year 2007
A budget is not something you must wait for the finance minister to announce on the 28th of February every year. A budget is a blueprint of your own financial plans. Chalk out a budget for the next year. Certified Financial Planner Gaurav Mashruwala advices, “This is good time to start even if you have not done in past.”

Estimate your income from various sources – your salaries, rental income, dividends, interest and so on. Plot the estimated expenses. This will help you make prudent investments. For example, if there are any major expenses in the family, for example, child’s higher education, marriage, you will need to liquidate some of your equity holdings and park funds in floating rate fund till event takes place.

2. I will rebalance my portfolio
Year 2006 has seen the equity markets burgeon beyond everybody’s expectations. In that background, Mashruwala says, “Calculate your debt equity ratio. If your equity component has gone up, liquidate some portion and invest in debt.”

He also suggests that it maybe the best time to sell off dud stocks. “Markets are at historical high. If there are ‘dud’ stocks in your portfolio liquidate them.”

3. I will resist the temptation to make quick profits
Since real estate, stock market, commodities (especially gold, silver) have appreciated considerably since 2003 and more so in 2005-2006, the opportunities of easy, quick and high profits have shrunk. Investors will have to be very selective, more patient and also tone down their return-expectations in 2007.

4. I will invest in equities but only systematically
Ask any expert which asset class is a must in 2007, and he will most likely say, equity!

But take that with a pinch of salt. Markets have run up dramatically in 2006, and as an investor, it would be prudent to diversify and invest wisely. For diversification and spreading of risk, one could be better off investing in a diversified equity fund than taking direct exposure to equity.

"Take care not to commit all your investible funds, invest prudently only to the extent of your risk appetite. Also don’t commit all your funds allocated for equity at one go. Buy piecemeal at every drop," beckons investment advisor Sandeep Shanbhag.

5. I will repay high cost loans
If you’ve piled up too much loan on depreciable assets like your car, your consumer durables or simply run up a huge credit card bill, its time to clean up your act. Interest costs on these loans are high and only a healthy equity market can earn you more than the interest you pay.

Mashruwala has a simple solution, “If you have borrowed funds for any of the depreciating assets than repay those loans from equity profits.”