It is necessary to invest money wisely so that your wealth grows over a period of time and provides you security in your old age. However, these investments should be made after proper research and consideration.
There are many ways to save tax and you can get this information on the internet. With a little research, you can find an online investment plan and then compare the investment plans.
Following are various investment options through which you can save your tax:
Equity Linked Savings Scheme
There are many methods of investment which can help you to save on your taxes. Investing in ELSS schemes is one of the best investments if you are ready to take the risk. The lock-in period in this method is the least.
There are three kinds of options available in ELSS i.e. Growth Option, Dividend Option, and Dividend reinvestment option. Equity-linked Savings Scheme plans which provide a great avenue to save on taxes and get growth at the same time.
Insurance also provides many investment plans which help you to save taxes. There are two avenues associated with life insurance policies, one is the life cover and second is the investment returns.
You may not treat insurance as simply a tax saving plan, because the main task of insurance is to provide for difficult times. You should keep in mind what the requirements of your Dependants are before you take a life insurance plan.
If you cannot spend much, then you should opt for a Term insurance plan which is affordable and provides life cover.
Public Provident Fund
You can also invest in a PPF account which is one of the best investment products. Investments in PPF accounts will be exempt from taxes; both the interest and the Maturity amount are tax-exempted. However, there is a limit to the amount that you can invest in a PPF account in a year.
Home Loan Principal
The principal component of the EMI being paid for your home loan is also exempt from taxes. It is best to get a break up from your bank.
Medical Insurance Premium
You can avail a limited deduction if you pay your medical Premium for yourself, your spouse and dependents. Along with this, if you are also paying a medical premium for your parents, it will be eligible for further exemption.
You should also check what your contribution to your PF account is. This is because this money is also tax-exempt and you can further save taxes with your annual contribution to your PF account.
- In a nutshell
- Check your contribution to the PF account
- Check the principal component of the EMI of your home loan
- Make investments according to your financial goals
- Evaluate your requirement for insurance
If you find it difficult to decide which plans to choose from then the best way to follow is to consult some professionals. There are professional investment consultants who will be able to guide you on how you should plan your investment. These consultants will analyze your financial situation and decide which plans will suit you the best.