Plan your tax saving investment now..!!

Dear Tax payer, 

Plan your tax saving investment now – don’t leave it for end of financial year

The Jan-March quarter is over and you are probably breathing a sigh of relief now that the last minute rush for investing in tax saving instruments is over. Most of us defer our tax saving investments till the last few months of the financial year, for example, in case of salaried employees- till we receive a reminder from the HR department (usually in the month of January) for submission of proofs of tax saving instruments. We don’t view tax planning as part of our financial plan; consequently, we end up investing casually without aligning tax saving investments to our financial goals. In the process, we invest in instruments which might not help create wealth in the long-term.

Investments in tax saving instruments should command the same well-researched and careful approach that other investments do. After all, it is your hard earned money. The best time to start thinking about tax planning is now. Starting at the beginning of the financial year gives you ample time to draw up a financial plan, research about the best tax saving investments and allocate resources between them in alignment with your financial goals.

Importance of starting/planning early

There are several advantages of starting early in the year:-

• ·         You can make better choices and right investment decisions.
• ·         You could save tax more efficiently and capitalize on investment returns.
• ·         You avoid the last minute paper work and mistakes.
• ·         You can eliminate the circumstance where you could end up not having enough money to spare for a lump sum investment at one go.

The best approach to tax planning is to invest throughout the year in a certain ratio such that by the end of the year you’ve taken advantage of most of the tax saving opportunities. The strategy of investing throughout the year in a staggered manner will not put liquidity pressure at the end of the year.

By composing the right mix of investments for your portfolio, you can pay less tax and ensure that you are receiving optimal returns. The Section 80C offers a broad range of options, each suited to a different need. Choose an option that fits into your overall financial plan. An Equity Linked Savings Scheme (ELSS) provides investors tax benefits combined with long-term wealth creation through equity exposure and comes with the shortest lock-in among all tax-saving instruments.

Investing in an ELSS through a Systematic investment plan (SIP) will not only be easier on the pocket, but will also, provide the benefit of rupee cost averaging and help take advantage of the power of compounding. This strategy is prudent as it decreases the risk of abrupt market declines which deplete your portfolio. SIPs lead to continuous investing regardless of fluctuating price levels in the market.

Let’s assume that of the Rs. 1,50,000 amount available under Section 80C your Provident Fund (PF) contribution (in case you are a salaried employee) and Other Instruments (LIC, Housing Loan) in the year amounts to Rs. 60,000 leaving you with Rs. 90,000 to invest in other tax saving instruments.

By starting a monthly SIP of Rs. 7,500 in an ELSS fund you could cover the entire amount in a span of 12 months. This would not only reduce your load to save for tax investment at the end of the year but will also help benefit from the power of compounding right away!

Next step

Start a monthly SIP in an ELSS fund to get triple benefits – tax savings, systematic investing and an opportunity to harness the potential upside of investing in the equity market

Check out the  Performance Report of Various Equity Linked Saving Scheme ( ELSS ) now!

Fund / Benchmarks	AUM 31/03/2016	NAV Rs	3 Months	6 Months	1 Year	2 Years	3 Years	5 Years	7 Years	Since Inception
			Return %	Return %	Return %	Return %	Return %	Return %	Return %	Return %
Tata India Tax Savings Fund	245.81	59.88	12.31	-0.43	1.44	16.41	20.42	14.64	15.86	19.65
DSP BlackRock Tax Saver Fund	1056.13	31.61	12.79	-0.75	-0.13	12.29	19.47	14.18	16.34	13.10
Birla Sun Life Tax Relief 96	1908.73	126.62	10.84	0.98	-1.02	18.84	22.70	14.88	15.04	25.78
L&T Tax Advantage Fund	1435.76	36.44	11.43	-1.33	-2.67	10.17	16.35	11.41	15.43	13.45
Axis Long Term Equity Fund	6957.75	29.56	8.69	-1.30	-5.08	17.78	24.55	19.56	—	18.43
SBI Magnum Taxgain Scheme	4319.01	105.27	10.15	-4.24	-8.34	9.90	16.82	12.89	13.21	16.98
Reliance Tax Saver Fund	4278.99	42.21	11.28	-4.14	-10.45	9.93	21.77	15.69	17.76	14.44

Call an Expert Financial Adviser , having years of Experience to Plan Your tax Saving Need Smartly.

Mehul Bheda

9819592326 | mebheda@gmail.com