Skip to main content

Risk involved in various Tax Saving Investments

Invest Mutual Funds Online

Download Mutual Fund Application Forms

 
1.      How much risk are you willing to take on the investment?

2.      For how long will you not need to use these funds? i.e. what lock in period is suitable for you?

3.      Do you want your returns to be tax free?

4.      Do you want the maturity values of your investments to be non taxable?

5.      Do you need liquidity?

 

---------------------------------------------

Invest Mutual Funds Online

Transact Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Fund Application Forms

 

Best Performing Mutual Funds

    1. Largecap Funds:
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    3. Mid and SmallCap Funds
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    4. Small and MicroCap Funds
      1. DSP BlackRock MicroCap Fund
    5. Sector Funds
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    6. Gold Mutual Funds
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

S. No.

Factor

Criteria

1.

Risk and Returns

·         Fixed rate of return with more safety - NSC, PPF, Bank FD OR

·         Market return with more risk - ELSS or ULIP.

2.

Lock-in period

·         Range: Up to 15 years lock-in;

·         ELSS has the least lock-in period of 3 years, whereas PPF has the highest of 15 years;

·         Others fall in between

3.

How return are taxed

The most crucial part is to look at how the returns are taxed.

·         Only PPF and ELSS offer tax free returns; whereas

·         Interest on NSC, Post Office term deposits and bank FDs is taxable

4 (a)

Tax Treatment on Maturity

·         Usually products offer tax deduction on investment

·         Few offer tax exemption on returns at the time of maturity

·         The taxability on maturity reduces the effective return that an investment offers.

4 (b)

EEE or EET category

·         Exempt-Exempt-Exempt (EEE) tax status - tax benefits at the investment stage, the accrual (accumulation) stage and maturity stage - PPF, ELSS and Life Insurance

·         Exempt-Exempt-Tax (EET) tax status - tax benefits at the investment stage and the accrual (accumulation) stage and are taxed at the maturity stage - Bank FDs.

·         In the new Direct Tax Code, lot of investment products will shift from EEE to EET wherein these products will be taxed at the maturity stage

5.

Maximum Investment Limit

·         If a product has maximum investment limit in a year, a tax payer will not be able to claim entire tax benefits for any amount invested above the maximum limit;

·         PPF has maximum investment in a year of Rs. 70,000

·         In case of ELSS and ULIPs there is no maximum investment limit.

6.

Liquidity

·         Most tax saving investment products come with a lock-in period;

·         PPF allows partial withdrawal during the 15 years tenure of the investment.

·         Tax savings bank FD cannot be broken before maturity and also banks normally don't give loans against these FDs.

·         Traditional Life insurance policies and ULIPs allow partial withdrawals but only after completion of 3 years. Also, as an investor you can take loans against life insurance policies.

·         An investor can also take loan against NSC Certificates.

7.

Inflation protection

·         Returns from financial products should beat inflation;

·         Low fixed returns products are to be avoided by investors during periods of high inflation as they yield negative returns.

·         In the long run equities have consistently given higher inflation adjusted returns than returns given fixed return securities.

Popular posts from this blog

How much to invest in gold ?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) Let your motivation dictate the share of the yellow metal in your portfolio Enough has been said and written about gold as an investment option. The latest argument is that the craze for gold among Indian households is endangering our country's balance of payments. The policymakers are busy trying to find ways of discouraging investment in gold, but if households keep the common good in mind, they would be paying the market price for gas cylinders as they do for, say, their mobile phone bills. After all, private decisions are driven by private motives. So, how should a household look at gold from its own perspective? Gold is primarily acquired for its merit as a store of value. Even if the worst crisis hits a family, the gold that it holds could be put to use anywhere in th...
Read more

Save Tax With Mutual Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300       Mutual funds are ideal as long term investment avenues for retail investors. To encourage investments in this avenue, the Government of India offers investors a spate of tax benefits thus ensuring maximum benefit from mutual funds held beyond a year. Sample some of the key benefits and refer to the table for a detailed list of tax rates for different types of schemes ·        Avail deductions under Sec 80C of the Income Tax Act by investing up to a maximum of Rs. 1 lakh in designated Equity Linked Savings Schemes (ELSS). Such investments have a compulsory lock in period of 3 years. ·        First time retail investors in equity with a gross total income of up to Rs. 12 lakh can invest up to Rs. 50,000 in specific MF schemes un...
Read more

Mirae Asset Ultra Short Term Bond Fund and Mirae Asset Tax Saver Fund

Mirae Asset Mutual Fund   has renamed   Mirae Asset Ultra Short Term Bond Fund , an open ended debt scheme, to   Mirae Asset Tax Saver Fund   with effect from October 18, 2016. Also, Mr. Sumit Agrawal, the co-fund manager of Mirae Asset India Opportunities Fund (MAIOF) and Mirae Asset Great Consumer Fund (MAGCF) ceases to be the fund manager with effect from October 1, 2016. Consequently, MAIOF shall now be solely managed by Mr . Neelesh Surana while MAGCF shall continue to be co-managed by Mr. Neelesh Surana and Ms. Bharti Sawant. ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in India for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. ID...
Read more

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...
Read more

Diversification is key to gain more

Even those who prefer debt for its safety are looking at more options    It is not often that you find more than a couple of asset classes producing good returns at the same time. Invariably, assets such as gold and equity don't perform in tandem, and hence it was easier to allocate to them in line with the risk profile of the investors. In the last couple of quarters, however, more than one asset has turned attractive - gold, debt and equity. In line with the trend, you even have monthly income plans with a combination of more than two assets.    In the past, those who stuck to debt were a different class of investors who didn't wish to take risk with their money. The changing lifecycles and the growing integration of investment markets across the globe have pushed even individual investors to embrace the concept of asset allocation. Hence, you have individuals who were using debt to park profits being prepared to take advantage of other assets.    For instance, when the...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now