Enjoy the Bright Benefits of Smart Tax-Saving Investments and Financial Planning
The main focus of financial planning is to map your
financial journey to your life goals, from a secure post-retirement life and
strong funding for your children’s education to critical emergency funds and
health plans. But achieving smart tax savings is another critical benefit that
investments and financial planning can deliver. Yes, most of us consider
financial planning as an important tool to save taxes, whether we fall under
the salaried or even the non-salaried group of tax-paying citizens. Choosing
smart tax-saving investments requires focused assessment of multiple features,
including returns, security, liquidity, and their tax-related benefits.
Here are that will help you to manage your income tax
and keep you on the right track of financial planning simultaneously.
Pointer 1: Avoid last-minute ad-hoc
investments focusing only to save tax
Many times, we are in a state of flux where you desperately
look around for investments in the last minute just around the time you are
filing your income tax. In haste, we often end up picking up the wrong
investment option just to save tax. This approach will definitely put you in trouble,
since, while the investment might temporarily help you save taxes, it might not
deliver the desired returns or may lock out your money in the long term. But
smart tax-saving investments like insurances and Government bonds can deliver
considerable tax relief but also ensure financial security. But the key is to plan
your investments in advance to be stress-free and to avoid chaos in the last-minute
bad decisions.
Pointer 2:
Saving tax today might lead to paying tax later
Remember that even if you invest in options such as SCSS or make
time-bound post office deposits, the interest you receive will be considered as
income and will be taxed. So while you save tax in the short run, you cannot
always completely avoid tax. So always calculate the tax savings against the
tax you will be paying from the interest and returns.
Pointer 3: Let tax not be the only
focus of your investment plan
Do not think only about the present tax benefit that
you can avail from an investment, rather think about the changes in life you
can bring about through such investments along with a certain amount of tax
relief. First visualize your life-goals before making any investments, and then
assess the tax-saving benefits that your investment decision can deliver.
Pointer 4: Get expert help
An expert financial advisor can help you earn an
income with crucial tax savings. For example a diversified mutual fund
portfolio can help you invest your money in options that deliver growth rather
than dividends, thus helping you with considerable tax savings. Similarly
options such as PPF, NPS, and EPF are also smart investments when approached
carefully. But each approach needs careful attention, since some come with poor
tax savings but great returns, while the others provide good returns but falter
when it comes to liquidity. Also remember to regularly revisit your investment
plans since the market, your requirements, and your goals are likely to change
with time.
Pointer 5: Make a long-term financial
investment plan
Long-term investments are a great option to consider because
every year you do not have to search for a tax saving investment plan. But be
cautious of the selection you make as not all long-term plans are tax savers. So,
understand your investment thoroughly before proceeding. The tenure of
investments, the amount that is taxable after maturity and returns that can be
reaped have to be researched before making a decision.
Derive the smartest benefits with
smart tax-saving investments
Planning your investments in advance can be a
lifesaver, especially if you are focused on the tax-savings element of your
investment all round the year and not just during the “tax seasons.” Always
start planning your taxes at the beginning of the year to avoid last minute
mayhem. Take help from a financial advisor to ensure that your hard-earned
money deliver to you the best possible benefits. Remember that placing all your
eggs in one basket is the worst approach you can take with making tax-saving
investment decisions. Hence take a smart approach to creating a diversified
portfolio with the help of an expert financial advisory service or an
investment advisor.
PrognoAdvisor is your trusted online financial planning service from
India, with extensive expertise in understanding your specific financial and
life goals and guiding you achieve these goals with confidence. Connect with
our financial advisors at Prognoadvisor.com to understand how you can simplify the entire process of personal
financial planning and meet your life goals with some smart wealth creation and
management, delviering, of course, some smart tax savings.
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