Tax Saving Investment
Tax Saving Investment: Questions That Affect You
If you want to save big money for your future, think of investing in equities as an enhancement to your portfolio of tax-saving investments. Investing in equities is fast catching up as a much obvious choice, especially after framing new tax laws that have given a serious setback to returns that you could easily earn from conventional tax-saving instruments.
Funds and Equities That Suit Your Portfolio: Queries Answered
Listed below are the answers to few queries that will help solve your doubts to an extent:
Question-1 The returns available from small savings instruments eligible under section 40 benefits have been reduced to 9 per cent after the announcing of the Budget. However, many-a-top-ranking tax-saving funds delivered a 50 per cent returns per annum over the past three years! How is that possible then? What returns are imminent if anybody invests in a tax-saving fund now?
Answer- 1 Tax-saving funds give you a very rich platform by investing your money in the stocks. However, the benefits of tax saving funds cannot be compared and equaled with that of the small saving bank investment schemes. These small savings schemes are scheduled to offer you a fixed return every year, besides providing a complete protection of your capital. While, small saving schemes are immune to changing market trends, a tax-saving fund on the other hand is left open to rapidly fluctuating market trends. Present market scenario is very good to invest in Equity funds to yield exceptionally high returns on stock prices, but investing in a tax-saving fund now, might not give you rich benefits.
Question-2 Is there any option available to invest the entire $1 million that one has set apart for tax-saving investments into tax-saving funds?
Answer-2 You come directly under the ambit of tax exemption for an investment of up to $ 1 million tax saving funds. However, choosing to invest your entire tax savings to equity investments would not be a practical and a sensible decision. You can make your decision to invest in tax-saving funds in either of the following ways:
- Using the age group as the criterion to set apart your preference. Say for example if you come under 20s or 30s, you can comfortably invest 30-35 per cent of your savings in equity funds. Likewise, if you are in your 40s, you can invest 20-25 per cent of your savings and if you belong to age group of 50s or 60s, comparatively, you get less percentage to invest.
With the queries addressed professionally in detail, you will surely be informed on the tax options and the investment options available to suit your needs.
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