Professional Documents
Culture Documents
Tax & Investment Planning
Tax & Investment Planning
Tax & Investment Planning
to
100,000/=
Repayment of Housing
ELSS-10K loan principal-20K
40,000/=
LIC, PPF, CPF, and
pension plan..etc-40K
Other Deductions
Recommendation
Make a house - don’t just live in it.
Insurance
Myths:
•Insurance is just another tax saving instrument.
•I do not need an insurance now. May be later...
•Why wait for 30 years? - let me take a policy for 15
years (or may be 10).
The Facts:
•Lower the age, lower the premium, - higher the age
higher the premium.
•As we get older - Health becomes a major impediment to
getting high insurance cover.
•Longer the duration of policy - lesser is the premium.
A THIEF CALLED INFLATION
Rs. 33.52
30 Stocks
20
Rs. 11.21
Co. Deposits
10
Rs. 4.81
Bank Deposits
0
Apr-80 Oct-82 Apr-85 Oct-87 Apr-90 Oct-92 Apr-95 Oct-97
Value Of Re. 1 After Taxes
(Rs.)
Period - April 1980 to December 1997
15
Rs. 13.80
Stocks
10
5
Rs. 5.44
Co. Deposits
Rs. 3.00
Bank Deposits
0
Apr-80 Oct-82 Apr-85 Oct-87 Apr-90 Oct-92 Apr-95 Oct-97
Value Of Re. 1 After Taxes & Inflation
(Rs.)
Period - April 1980 to December 1997
Rs. 3.16
Stocks
2
Rs. 1.24
Co. Deposits
Re. 0.68
Bank Deposits
0
Apr-80 Oct-82 Apr-85 Oct-87 Apr-90 Oct-92 Apr-95 Oct-97
Post inflation & Taxes
Recap - value of 1 Rupee in 17 years.
Other 14%
investment 44% 37%
outperformed
Stocks
outperformed
56% 63% 86%
14.47%
9.74%
9.19%
7.62%
Investment avenues
Inflation Gold Bank FD Co. FD Equities
How do we invest in equities or
Company Fixed Deposits?
• Carry out extensive research and identify
the right share/company.
• Identify a reliable broker.
• Track your investment regularly.
AS AN ENTITY - IT IS A TRUST
AS A CONCEPT - IT IS A SERVICE
Convenience
Liquidity
Tax Benefits
Mutual Funds & Tax Benefits
Section 88
INCOME TAX
BENEFITS Section 88 (2)
B a n k F ix e d D e p o s its M u tu a l F u n d s
R e tu r n s - R s .1 0 0 0 0 R e tu rn s - R s .1 0 0 0 0
P T R - R s .7 0 0 0 P T R - R s .9 0 0 0 R s .3 0 0 0 @ 2 0%
P T R - R s .9 4 0 0
RISK Vs RETURNS
EQUITY
Time
SECTOR
DIVERSIFIED
EQUITY
INCOME FUND
BANK FD
RISK
Mutual Fund - The Top Scorer
FDs FI Bonds Open-ended
Mutual Funds
Accessibility Low Low High
Tenor Fixed (Medium) Fixed (Long) No Lock-in
Min. Investment Rs. 1000 Rs. 5000 Rs. 500
Tax Benefits None 80L 80L , 112
Liquidity LowVery Low Very High
Convenience Medium Tedious Very High
Transparency None None Very High
What Is Wrong With The Way We Save?
disciplined and
Our saving habits are not
systematic in approach
BOTH ARE OF
SAME AGE
Anu starts investing at 25 year’s age Prakash starts investing at 35 year’s age
Invests Rs. 5000 monthly for 10 years Invests Rs. 5000 monthly for 25 years
Anu has Rs. 4.6 crores Prakash has Rs. 1.5 crores
7,643,653
4,999,569
• Identify Objectives
• Harness the power of compounding
– Start early
– Focus long-term - Stay invested
• Be aware of the effects of inflation
& taxes
• Diversify
SUMMARY
• Banks effectively destroy purchasing power.
• Manage salary pro-actively and get that raise in
salary.
• Insure adequately - 5 times annual gross.
• Have liquidity in Income Funds.
• Use all products - judiciously and maximize your
wealth.
• Be disciplined.
INVESTMENT OPTIONS
• MUTUAL FUNDS
• LIFE INSURANCE
• GENERAL INSURANCE
• 54EA INVESTMENTS