We have 12 months in a financial year and just like joining a college without a purpose we spend 9 months without any planning for income taxes and during January when we need to submit the tax saving proofs, we rush to Tax saving fixed deposits, ridiculous!
Love can blossom anytime and anywhere, but a true love will take time and tide to come over and withstand, hope many can relate with love. Fixed deposits can be bought in no time, but it will burn your pockets at the end of 5 years (as they have lock-in period of 5 years) but a ELSS or Tax saving mutual funds has to come over stock market ups and downs but the returns are always better and withstand inflation.
Insurance, are we clear with what is insurance? It is an instrument used to hedge against risk i.e. pure risk protection. ULIPS and Endowment plans are insurance cum investment plan which will not help you in achieving neither risk protection nor in attaining investment goals. Everyone must stop investing in insurance, and take protection or purchase a cover that their family needs when they are not there.
Other instruments like PPF has a lock in period of 15 years and the returns of 8.75% may not be continued for a long time, further government has plans to increase the lock in period of minimum 10% of the corpus to till 60. Other conservative taxes saving instruments are taxable at the end which will not serve the purpose.
ELSS or Mutual funds has a lock in period of 3 years and the returns has always been better than 20% if you had chosen better funds in the market.
Don’t rush in the month of Jan or early feb to complete your tax saving fixed Deposit investments as you have time till march to show your investments for income tax. Even if you miss the office deadline, you can claim the tax deduction while filing tax returns in July. Utilize the tax saving limits to increase your returns & make it work for you, than mere saving that money which will not be useful in the future, considering the inflation adjusted returns.