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Stressed out at work and find no time to plan out personal investments! This seems to be the common ailment of all employees working hard with an aim to build a financially safe & secure life for themselves & their family.
For such of you, we have presented herein simple yet effective personal investment tips that would go a long way in securing a great financial future.
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1. Mind your tax – Ensure that you declare your annual tax investments to your employer at the beginning of the financial year. This way you would avoid paying unnecessary extra tax.
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2. Invest & Karo Relax – In order to save tax, you can invest in tax saving instruments that can be in the nature of fixed interest investments (PPF, Fixed Deposit, Post Office schemes, NSC etc) OR equity oriented investments (ELSS Mutual Funds, ULIP etc). The idea is to spread out your investments evenly through the year so that you do not face a sudden money outflow putting pressure on your finances.
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3. Debt, Sure! – For those of you interested in the safety of your principal, you can invest in fixed interest investments. However, remember to focus on those investments that generate better post tax returns. For example, investment in PPF account would fetch you post tax return of 8% as it is tax free. Whereas, a FD or NSC with same 8% rate may fetch you lower net of tax returns of 5.29%.
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4. Ensure to Insure & Be Secure – Ensure that you assess the right amount of life insurance coverage required by you & your family and obtain the requisite insurance cover. Though most of us look at life insurance as an investment, sincere piece of advice is to look at life insurance as a risk management tool. Use cheap insurance plans such as term insurance to cover a large risk cover at a very low price.
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5. Health is Wealth – This adage has a deep meaning for all of us. Most of us assume that as we are have health / medical insurance coverage given by our employers and hence we do not need to have a separate cover. This is a common mistake committed by many of us, reason being, what happens when we switch jobs or get into self employment? In such circumstance, we are left with no health cover and in case we go for a health cover then, the premium is very high.
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6. What is your Equity – Many of us are averse to exposure to the equity investments such as shares / mutual funds etc. However, one has to remember that equity investments in the long run, generate better returns than any debt investments. The thumb rule generally used for deciding the proportion of equity & debt investments is 100 minus your age. Hence, if you are 30 years then you could be exposed to equity investments to the extent of 70% & debt investments to the extent of 30%. Investing systematically & in blue chip companies or good funds would reduce your financial downside risk.
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Team relaxwithtax™
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