Tax on your annual income is as annoying as pineapples on Pizza, right?

Trust us, we hear you. 

You can pick those annoying pizza toppings and save yourself from misery. Similarly, you can save a ton of tax if you know where to invest. 

As much as you might dislike it, you gotta do the taxes. 

Don’t worry though. Our team has shortlisted some popular and useful tax-saving instruments. So get a pen and paper and note down beneficial investment avenues for you.

Let’s save some tax, shall we?

7 Tax Saving Instruments For Investors

1. ELSS Mutual Funds

Equity Linked Saving Scheme is one of the popular tax-saving instruments among investors. Not only can you save tax but also earn some decent returns over the investment horizon.

Fund houses invest at least 80% of total assets into equity or equity-related instruments. You can invest any amount in ELSS funds. However, you are only eligible to get tax deductions on a maximum of 1.5 lakhs of the total invested amount. 

On top of that, you can also get tax benefits on long-term capital gains of less than 1 lakhs. 

2. Public Provident Fund (PPF)

PPF is another popular investment avenue among Indian households as it’s a government-backed fixed-income scheme. You can build wealth over the years and save tax on the PPF amount.

You can create a PPF account in a bank or in a post office depending on your convenience. Government announces the interest rate on PPF each year which remains the same for that year. 

You can invest from Rs. 500 to 1.5 Lakhs in a financial year to get tax exemption under section 80C of the IT Act. The interest earned is also exempt from tax.

Though the lock-in period for the PPF amount is 15 years, you can withdraw the partial amount in 5-year intervals or get a loan against that amount. Read more about PPF here.

3. Tax Saver Fixed Deposit

Tax Saver Fixed Deposit is a tax-saving FD under section 80C of the IT Act with a lock-in period of 5 years. Individual or joint account holders can create this FD to get tax benefits. 

For joint accounts, only the first holder is eligible for tax benefits. 

If you are planning to create FD, go with a tax saver FD scheme. Please note that any premature withdrawals may compromise your tax benefits. Read the scheme terms carefully before creating the FD.

4. National Pension System

Post-retirement financial security is one of the important decisions one has to make. If you already don’t have a retirement plan, you must create one to safeguard your future.

National Pension System/Scheme can be beneficial for you to build retirement funds and save taxes. It’s a systematic investment policy where both employees and employers can invest funds. You can save tax on up to 1.5 lakhs of the total amount under section 80C of the IT Act. 

Additional Tax Benefits Over and Above 80C: Salaried employees can also save tax on up to 50,000 under section 80CCD(1B) of an IT act. Employees become eligible to get tax exemption by investing up to 10% of their salary into NPS. Self-Employees can get tax benefits of an additional 50,000 under 80CCD(1B) by investing 20% of their annual gross income.

5. National Savings Certificate

Similar to PPF, NSC is also the safest investment where you can earn interest and gain tax benefits. 

NSC is a fixed-income investment scheme available to purchase at any post office branch. With 5 years lock-in period, it offers returns nearly similar to FDs. 

You have to invest atleast 1000 in NSC. Though there is no maximum investment amount threshold, you can only get tax exemption on up to 1.5 lakhs under 80C of the IT Act.

6. Insurance Premium

Individuals who have purchased life insurance are eligible for tax exemption of up to 1.5 lakhs of the total premium paid under section 80C of the IT act. 

The amount on maturity or the amount the nominee gets after the passing of the policyholder is also tax-free.

If you are also paying for your family’s and parent’s health insurance, then you are eligible for tax benefits under section 80D of an IT act. 

Here’s how it works:

Healthcare Insurance Covered Individuals	Yourself + Spouse + Children	Your Parents	Total Tax Exemption Under 80c
Yourself, spouse, children (< age 60) + parents (< age 60)	25,000	25,000	50,000
Yourself, spouse, children (< age 60) + parents (> age 60)	25,000	50,000	75,000
All covered individuals (> age 60)	50,000	50,000	1,00,000

7. Senior Citizen Savings Scheme

As the name suggests, the scheme is beneficial for senior citizens. By investing up to 15 lakhs in SCS policy, senior citizens can get tax exemptions of up to 1.5 lakhs. 

The eligibility criteria for the SCSS:

• Citizens aged 60 and above
• Citizens aged above 55 who have voluntarily retired
• Employees of the defense sector of India aged above 50

The Central Government of India determines the interest rate on the SCS scheme, making it safer to invest in.

Conclusion

Section 80C of the IT act is the most popular tax-saving act. Any one or a combination of the options mentioned above can help you get tax exemption on up to 1.5 lakhs in a financial year.

For working individuals, we would recommend ELSS mutual funds or PPF. Starting an ELSS SIP can help you build wealth as well as save tax. 

PPF has some great advantages as you gradually save for a longer duration. It offers a higher interest rate than FD or saving account.

Choose what fits best for your financial goals. Or you can always reach out to our advisors for more guidance and portfolio analysis.

Gone are the days when financial planning was the responsibility of a man. Now women are equally financially stable and independent. 

Whether as homemakers, self-employed women, or working professionals, women are becoming increasingly astute in financial planning. Although earning income is a part of financial independence, real stability comes through money management.

Financial planning, in reality, is beyond saving a chunk of monthly salary. It is also about having a long-term wealth goal for a secure future.

Women often plan everything ahead of time. It’s time to now create a plan for financial stability and security. 

Here are some tips to help you achieve your financial goals;

Top 10 Financial Planning Tips For Women

1. Plan Long-Term Goals For Your Retirement

You must already be saving a percentage of your salary each month. That’s good, but that won’t be enough.

Various studies have proved that women live longer than men. And, women’s work-life span is shorter.

We have often come across people who only plan to build wealth until they are, say, 78-80 years old. But what if you live longer than that? What will you do for the next 10 or possibly more years without proper financial planning?

Additionally, women face various challenges in their professional lives. Many women give up their jobs to look after their house and children. On top of that, women often have a lower pay structure than their counterparts. 

As unfair as it sounds, women have fewer resources and less time to build wealth. However, overcoming hurdles and having a secure financial life is achievable. 

You can start building wealth for your retirement by investing early. Allow yourself to think for a longer term. We would suggest adding 10 more years to your retirement savings goals. 

2. Stay Involved in Your Family’s Financial Planning

This is one of the most important tips we would give to all the women out there. Stay involved and stay aware of all your family’s financial planning. We cannot stress this enough.

Even if your husband is responsible for financial planning, you should also have a fair share of thoughts and knowledge.

Sudden circumstances such as the death of the partner or divorce may cause women to trip over finances. Now, who would manage everything? What about that car loan EMI? Or the home loan instalment? And there could be more.

At VNN Wealth, we have come across many women who had no idea about finances after losing their spouse. We have seen women struggle to manage sudden changes in life. While we were able to help them, we would suggest taking the necessary steps to be prepared.

To avoid stumbling across uncertainties in life, always stay on top of all your family’s finances. 

3. Save Every Month Via SIPs

Although women have great money-saving skills, they don’t invest as often. As said above, saving is not enough. You must actively invest too. 

SIPs are the best and easiest way to start building wealth for you and your family. You can invest a small amount of money each month in equity or debt mutual funds. Even INR. 500/month can make a huge difference in the long run. 

Additionally, mutual funds via SIP with compounding interest can exponentially boost your return.

If you already have an investment portfolio, get it reviewed to receive personalized investment tips. VNN Wealth provides complimentary portfolio reviews and our advisors can also help you create and build a portfolio from scratch. 

You may also like- Top 5 benefits of SIP.

4. Invest in Paper Assets Instead of Physical Gold

We Indians have always been buying gold jewellery as an investment for rainy days. But we are also sentimental about the jewellery. Who would want to sell those beautiful earrings that your mother gave you on your wedding day, right?

Understandable! But not so much reliable.

Instead, invest in Gold ETF. Not only will you save making charges but it’s easier to sell too. No sentiments attached is a plus point. 

5. Keep Track of Expenses and Taxes

Expenses come and go as they please. You wouldn’t know where all your money went without keeping a track of it.

Create categories of expenses and assign a budget for each category. Cut down on unnecessary expenses and maintain an expense sheet. It will help you stay within an assigned budget, but will also help you file taxes.

Taxes are both tricky and fascinating. You can save a lot of money with an effective filing of taxes. You can also invest in various tax-saving instruments to save more tax.

6. Separate Financial Support For Your Family

Family emergencies can knock at your door anytime. You may need to arrange money or break your fixed deposits for your family’s well-being.

Keep different investments for you and your family. Take your family and children’s future into consideration. You may want to create separate savings for your family’s healthcare, children’s education, and your own well-being. 

Don’t sell your retirement funds or personal investments sooner than you had planned. The biggest mistake people often make is the early withdrawal of funds. Not only does it shake up your portfolio, but you will also lose potential returns on those funds. 

Instead, build separate financial support for your family. Don’t sell your funds in a panic.

7. Don’t Forget About Expenses During Your Old Age

Today, you are doing everything in your household. Tomorrow, you might not be able to do it.

Old age can cause quite a few difficulties. You may need to hire a househelp or a full-time attendant. You might not have as much energy or health as you have right now. Expenses in your old age might cause a solid dent in your savings if you are not prepared. 

Always plan ahead of time for such expenses for your family and yourself. 

8. Health Insurance Plan 

Many companies often provide health insurance to employees and you may already have it. However, we would advise you to also buy an external health insurance plan for you and your family. It’ll help you cover medical expenses without burdening your savings.

Many health insurance companies offer better coverage if you buy it early in your life. 

While buying health insurance, don’t forget to get life insurance. Be sure to include critical illness or disability in your life insurance as an added support to your health insurance.

You can also opt for whole-life insurance coverage to provide financial support to your spouse. That way, your surviving spouse gets a payout.

9. Re-Evaluate Your Financial Plan Periodically

The expenses you have today may change in a few years. Expenses after getting married, having children, and growing older will be different and probably dramatic.

By re-evaluating your financial plan, you will be able to consider newly added expenses. Update your investment portfolio accordingly.

10. Quick Money Saving Tips

• Evaluate your money-spending habits to cut down on unnecessary expenses.
• Unsubscribe to online/offline services that you don’t need anymore.
• Keep track of your credit card payments, EMIs, and loan installments. 
• Use your credit card benefits and rewards to save more on each purchase.
• Set a spending limit on your debit/credit cards.
• Be vocal about your financial goals with your spouse/family, so you can align your goals. 
• You can also consider hiring a financial advisor for your family. Here’s how to choose the right financial advisor. 

Plan Your Finances Today!

Have you ever seen your mother or grandmother save money in her rice container? Whenever she could, she would keep a small amount safe somewhere for rainy days.

Women have always been excellent financial planners. However, there is a considerable gap in the technical financial knowledge between men and women. In fact, more than 90% of women in India, do not actively seek financial knowledge. 

It’s time to take it up a notch, ladies! Reading financial news, investment/personal finance blogs, or reaching out to financial advisors can be your next step.

Plan for your and your family’s financial security and well-being. Keep up with your expenses and taxes every year. Invest whenever you can. 

If you are ready to strengthen your investment portfolio, get in touch with our financial advisors. Evaluate your portfolio and rule your finances like a boss. 

Keeping track of finances is the most crucial aspect of building wealth for the future. 

You can surely do it on your own until your financial instruments grow in every possible direction. Your family expands, your needs and wants increase, and your liabilities take a different turn. 

And when that happens, you are going to need a trustworthy and knowledgeable financial advisor. 

Financial Advisors can understand YOUR financial goals to give you the right advice. 

You need a financial advisor for-

1. Creating a sustainable investment portfolio
2. Monitoring your investments and taxes
3. Tracking your expenses
4. Creating savings for Children’s Education/Wedding 
5. Emergency corpus building
6. Retirement Plan
7. Other liabilities

But the question is: How to select the right financial advisor? Whom can you trust with your wealth?

Not to worry. We have got you covered. Here’s what to look for in a financial advisor.

6 Things to Look for in a Financial Advisor

1. Look for Knowledge

Managing finance isn’t an easy thing. Even financial advisors learn from their mistakes as the market can be unpredictable.

When you look for a financial advisor, always check their knowledge and professional background. You can ask them for references and talk to their clients for more information.

Advisors who have handled finances through various cycles of the economy will bring more knowledge and experience to the table. Apart from the equity market cycles (which everyone seems to be savvy of, considering the information overload), an additional factor to consider is the number of interest rate cycles the advisor has worked through. Bonds and various debt instruments form an important fragment of asset allocation so it’s important to know whether your advisor is well-versed with the impact of interest rates on investments.

The market is full of financial advisors who can claim unrealistic outcomes, but you should evaluate realistic scenarios.

This brings us to the next point.

2. Realistic Expectations

No advisor can promise you how much returns you will get in a year. 

If an advisor is claiming 25-30% returns in a year, that’s a big NO right there. 

In fact, the word ‘Guaranteed Returns’ is not listed in an advisor’s dictionary.

Instead, experienced financial advisors will give you realistic estimates. They can plan your investment based on your risk profile, short and long-term goals, taxation, and insurance.

3. Proper Licenses

Financial advisors must have a license for the financial instruments they are selling. Certified Financial Planners (CFPs) or Chartered Accountants (CA) can guide you with finances and taxes.

If you want to invest in mutual funds, Advisors having a certificate from the Association of Mutual Funds in India are best suited. For insurance products, you may seek advisors who have a license from the Insurance Regulatory and Development Authority of India.

Always prefer working with certified financial experts. 

4. Financial Advisors Should Focus on Your Goals

You might have come across advisors who are more interested in selling financial instruments than to help you. That’s a red flag. 

Your financial advisor should focus on your financial goals, your investments, and your risk profile. The reason you are hiring a financial advisor is to simplify budgeting, taxation, insurance, long-term investments, and more.

If their focus is more on commission than on your needs, you shouldn’t proceed. Work with an advisor who is willing to listen to you before giving any sort of advice.

Tip See if the financial advisors have worked with clients who have similar interests/goals as you. Seek old track records of the advisor’s clients and their progress before making a decision.

5. Financial Advisors Must be Passionate About Wealth Management

Is your financial advisor talking passionately about current market scenarios and industry trends? If yes, you’ve got a good one there. 

Passionate financial advisors tend to constantly be in a learning and researching phase. They love to know what’s happening in the market. They gravitate towards finding out about new financial products, changes in law, new methodologies, and more.

Their passion becomes their primary gateway towards gaining relevant experience. If you want to know if the financial advisor is aware of new trends, ask them- “What’s new in the industry?” and see how they answer.

6. Communication Skills

It’s normal to be skeptical about letting someone else handle your finances. Trusting someone won’t come easily.

That’s why the communication skills of an advisor matter a lot. 

Your advisor should be able to explain finances in simple language. You should be aware of what’s going on with your investments. The advisor must be able to answer your queries and communicate all necessary details with you.

Often, you might come across advisors who talk a lot but offer no useful insights. 

An advisor should be able to share his/her experience, client success stories, suitable investment possibilities for you, and real-time market insights. And as an investor, you must seek this information as often as you can.

Keep communicating with the advisor to be on the same page. 

Conclusion

Everyone loves adulthood until the finances knock on your door with possibly ten arms. Then childhood seems much easier. You had nothing to worry about apart from your piggy bank. 

Remember though, your finances don’t need to be complicated. You can easily get everything sorted with the help of a financial advisor. 

Most of the time, people are not on-board with the idea of letting someone else manage their finances. But think of it as a collaboration. When you let an expert handle your money, you have a chance to earn more. Your money can bring more money with suitable investments.

But don’t forget to do your research as well.

You can analyze your portfolio for free at VNN Wealth to have a thorough glance at your investment. Once you have a clear idea of what you want to achieve in the next few years, our financial experts can guide you. You can explore all types of investment opportunities that can build wealth in the long run.

 

Have more queries regarding investments and finances? Contact us anytime.