| Making investments that enables one to save on income tax is one of the commonest and yet one of the least well-planned investments. Most of us are happy that the tax-saving investment we make has saved tax. Whether it suitable as an investment or not is generally not thought about. Why does this happen? The basic reason is that there is a confusion of goals between saving tax and making investments. The typical investor makes this decision either in late March under the duress of having the deadline slip by. At the end of the day, we may make sub-optimal investment decisions and even if we realise it, we console ourselves by saying that that at least we got tax benefits. This duality of concerns—tax as well as investments—prevents clear-headed thinking about just exactly what one is getting out of an investment. However, these investments should also be treated as actual investments. The investment part—the returns we get should be considered as important as the tax we save. For example, if you otherwise do not need to invest in a traditional fixed return avenue, but would rather invest in equity, then you can do so in your tax-saving investments as well. In fact, going in for traditional tax-saving instruments like PPF, fixed-return deposits carry the disadvantage of long lock-in periods ranging from five to fifteen years. By contrast, Equity Linked Saving Schemes(ELSS) can offer all the wealth building opportunities of equity funds, coupled with the same tax-saving, with a lock-in period of just three years. Birla Sun Life Mutual Fund offers investment solutions that help you grow your wealth with equity while savings taxes, all with a shorter lock in than traditional tax-savers. | ||||||||||||
| Key benefits of saving tax by investing in an ELSS scheme by a mutual fund | ||||||||||||
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| The Financial Solution (Save Tax and Create Wealth) stated above is ONLY for highlighting the many advantages perceived from investments in Mutual Funds but does not in any manner, indicate or imply, either the quality of any particular Scheme or guarantee any specific performance/returns. |
ICICI Pru LifeTime and ICICI Pru Lifestage are Unit Linked Pension Plans. Such insurance linked retirement plans are neither good investments nor do they offer sufficient insurance cover. As you can see, these have turned out to be bad deals. In the Lifetime plan, the fund value is not even equal to the total premiums that you have paid and in the Lifestage plan your return is just about 6% which is quite low. The mortality charges are as per your age which is why they have increased. Moreover, once these plans matures, you will have to compulsorily opt for annuity (regular income) and the annuity rates are generally modest. Assuming these plans mature in the next one year, it will be wise to surrender the plan now and curb your future commitments. Before you choose to buy a term plan, you have to consider a few points. You need to insure yourself, only during the time you are working and your family is financially dependent on you. At the age of 59, not all insurance companies w...
