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Maximizing Benefits Under Section 80C: Financial Planning
Maximizing Benefits Under Section 80C: Financial Planning
Maximizing Benefits Under Section 80C: Financial Planning
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Maximizing benefits under section 80C
Source: IRIS (20-JUL-10) Why to make your Will today! - 02-Aug-10
> Consolidate your investments, yet maintain diversification: Often, you are unsure of the
investments done in the past, this is because, you have gone all out to do your investment but in a
haphazard manner. You may have no clue about how your portfolio is distributed. It is seen that in
the last minute rush, ploughing money into VPF or dumping it into an ELSS fund is a common
practice. It is a good idea to evaluate the ideal asset allocation for yourself. Do not make too many
small investments as it could be difficult to monitor. Look at your past investments and diversification
while choosing the avenues you plan to use for the year. It is a good idea to have a combination of
Equity Linked and Traditional Bonus Linked and Guaranteed/Low Risk options. Do not skew your
investments towards either of the above.
> Tax - free returns: There are many avenues which may not be tax -efficient, some of them being
pension plan, Fixed Deposits, NSCs, etc. While investing, always do understand the taxability of
returns. However, the game would change significantly post implementation of the Direct Tax code.
> Align investments with financial goals: Always align your investments with your financial goals,
chalk out your dreams, and enumerate them. Eventually all investments should be targeted towards
helping us achieve our financial priorities. It is possible to align all your investments to these
priorities of yours with some planning. This will be your starting point for all kind of investments -
tax saving or otherwise. This way you can ensure that you invest into avenues that are appropriate to
fulfill your financial goals rather than what someone wants to sell to you.
> Hedge your life / health Risk: Safety comes first - be it in investment or otherwise, evaluate your
human life cover and avail either a pure term insurance or investment - linked insurance as per your
comfort. Although your company may provide risk coverage as part of their group health insurance,
you should be in a position to cope with uncertain medical emergencies or even during unpleasant
events such as job losses. The premium paid towards medical insurance is deductible u/s 80D to the
extent of Rs 15k / annum, for self and additionally one can avail a benefit of Rs 20k / annum for
one`s dependent parents` as well.
Apart from above, one can also invest in low risk options like NABARD rural bonds and 5 year post
office time deposit. A new section was introduced during the recent budget - Section 80CCF which
offers an additional benefit of Rs. 20k - however, this amount had to be exclusively invested in
infrastructure bonds. Don`t miss out on this investment for the current year.
Hope this helps you deal with your tax saving woes from the beginning of the year itself. Tax savings
can really help in wealth creation since you have a wide range of options you would have invested into
as an investment - the tax saving helps enhance the take home with a significant impact on returns.
The author is the founder and CEO of Right Horizons, an investment advisory and wealth
management company.
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