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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 at the end of the year thus 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, invest in instruments that generate tax free interest income such as VPF (Voluntary Provident Fund) with your employer, PPF (Public Provident Fund) etc instead of FD, NSC etc, whose interest income is subject to tax. 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% assuming you are in the highest tax slab.
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4. Ensure to Insure & Be Secure – Use life insurance cover as a risk management tool instead of investment option. There are other better investment options than life insurance plans that could generate higher returns for you. Firstly, assess your life insurance requirement correctly and then go for cheap insurance plans such as Term Insurance. This would ensure you get larger life coverage at very low price.
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5. Health is Wealth – Obtain health / medical insurance cover separately even though your employer gives you this coverage. This would ensure you of health / medical cover when you are in between jobs or you are getting into self employment. Remember, health cover becomes expensive with growing age.
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6. What is your Equity – Systematically invest in equity investments such as shares / mutual funds etc through your working life. Disciplined investing in blue chip company equity shares and / or equity oriented diversified mutual funds would in the long time horizon fetch you superior and virtually risk free returns. You could follow the thumb rule generally used for deciding the proportion of equity & debt investments, which 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%.
Team relaxwithtax™
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