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Financial Planning chennai India, Private wealth management chennai India, Investment Advisory India, Systematic Investment Plan, Mutual Fund SIP, Mutual Fund ELSS, Tax Saving scheme

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Tax saving investment

5 Mistakes You Should Avoid in Selecting Tax Saving Investments

by Holistic Leave a Comment | Filed Under: Tax planning

The word ‘tax’ troubles every salaried individual and business person, equally. Nobody likes when a portion of their income gets deducted in the form of tax. Therefore, individuals that fall in the tax bracket, choose certain tax-saving schemes like PPF, Mutual Funds, and tax-saving FDs, life insurance, Mediclaim policy or property investment.

The deduction available under Section 80C from the taxable income for the amount invested in a scheme is a pleasing one for most taxpayers. However, many taxpayers end up making wrong investment decisions to save tax.

The article underlines the common errors that one needs to avoid when choosing the right tax saving investment instrument. A few of these are listed below:

1. Taxation of return

Most of the time, two types of investment may seem to give similar returns, but while one may yield taxable return, the other may give tax-free returns. For instance, interest earned through Public Provident Fund is tax-free. On the contrary, interest earned on National Savings Certificates is taxable. In order to save tax and earn good returns, you should compare the post-tax return on both instruments to find out which is more beneficial.

2. Investment Amount

Generally, taxpayers end up investing the total amount of Rs. 1 lakh without considering other amounts that are also eligible for deductions. Children’s school fees, repayment against housing loans, PF deduction, and insurance policy premium are some of the investments that are also eligible for deductions. Investing entire amount in one scheme is not advisable.

3. One-time or recurring payment

Mostly, taxpayers choose recurring payments to enjoy the benefits of deductions, such as premium on life insurance policies, which may not be suitable to your needs or cash flow. A particular investment may be suitable in one particular year, but may not be required in another year.

Choosing recurring payments may not be appropriate in such case. It unnecessarily increases your liability. Therefore, unless the need be, do not opt for recurring payment. Also, there is a huge need for regular financial check-up depending upon the face of the markets.

4. Check the eligibility of the investment

Although life insurance premium, mutual fund ELSS and FDs qualify for deductions, you should make sure that it also qualifies for the benefit of the deduction, before investing.

Not all Mutual fund investments are available for tax deduction, only ELSS schemes. Not all 5 year FDs are available for tax deduction, only tax saving FDs. Insurance premium of policies, in which the premium is more than 10% of sum insured, and then tax deduction is not applicable.

Therefore, please make sure about the tax deduction eligibility before finalizing the investment.

5. Investment at the end moment

One of the most common, yet biggest financial mistakes people generally do is they invest at the end moment. When it comes to submitting investment proofs in the office, people realize they now need to invest urgently.

As the time is relatively less, people tend to choose an option that is easily available, without doing any research and comparison. In such case, it is usually seen that either the investment does not totally suit to the needs of the taxpayer, or is not the best choice he could have opted for. Therefore, rather than regretting later, you should make a sound decision on time.

The Bottom Line

Before investing, one need to keep in mind that investment of any type should always be done, after analyzing possible alternatives, and not abruptly. Your investment should not just be for the sake of tax saving, instead it should also be for getting better returns. Taxation is the only one reason why one should invest. The other important reason is the post-tax yield on the investment.

To have a tax plan and investment plan completely in alignment with your financial goals, you should have a well thought out financial plan. If you are really interested in creating a personalised financial plan, then I would firmly suggest you to test-drive our services by opting for

If you have any comments or questions, write them in the comment box below.

Or are you interested in creating a Comprehensive Financial Plan for your financial goals?

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Jey S
Jey S
24. September, 2021.
I have been using Holistic Investment Planners for the last three years. Mr. Srinivasavaradhan answered all my questions and doubts very patiently during the first free consultation. I was able to clearly define my short-, medium- and long-term goals once I signed up for the comprehensive plan and got their investment plan suggestion to achieve my goals. They are very polite and highly professional whenever I contact them for any queries or make investments. They never pressurize you to invest on their recommended financial products. I would have been lost money by investing directly without their help since I do not have time and knowledge about different financial products. Risk planning is also done as part of financial planning. Truly, they are holistic planners when it comes to your financial planning. They help you to define your life goals, understand your financial resources and establish a plan to invest towards reaching those goals. They do review your plan as you progress to make sure that you are on correct path to achieve those goals. Kudos to the team and keep up the good work!!! I am happy that I found holistic investment planners for my financial planning and management.
aksaswadkar
aksaswadkar
24. September, 2021.
I was about to retire and really not understanding how to invest money to have financial freedom and fulfilling my goals. Was desperately searching on internet way out and fortunately came across Holistic Investment Planners. I read number of articles on their website and realized that this is the agency which I want and engaged their services for my retirement planning. It is an excellent experience to be associated with Holistic. Right from day one our interaction was fantastic and they gave me such a wonderful plan that I had never imagined. I am fortunate enough to be in the client list of Holistic. I have recommended Holistic to my friends as well.
Lionel Faber
Lionel Faber
16. September, 2021.
I've been availing their services for the past year. They are highly knowledgeable in the field and are very patient with all doubts and queries. Personalized financial planning is provided keeping your short term, medium term and long term goals in mind. They do not pressurize you to purchase schemes of their choice. They provide their input and suggestions and leave the decision up to you which shows their honesty and high principle.
Sridhar
Sridhar
8. September, 2021.
Financial planning brings peace in life. Holistic Investment have supported in arriving financial plan based on future goals. My investments are regular since then. They are professionals in their business, will recommend others.
Nitesh Agrawal
Nitesh Agrawal
6. September, 2021.
I have been using Holistic Investment Planners from last one year. The journey has been fantastic. Being a finance person myself I always thought we can look after and plan own finances also. However, due to lack of time and deciplain the things are not always as desired. After joining with Holistic Investment for the first time Icame to know the Financial goals and quantified them. Some dreams were unrealistic based on the earnings and savings so had a reality check. Also got the information and deciplain of investing on regular and more rewarding securities. I definetly suggest to use Holistic Investment Planners. They are professionals, available and hear youor full story before presenting plans. They are flexile in the sense if there are some urgent deviations required, they help to plan the same. For all professionals/individuals I would suggest using professional help of Holistic Investment Planners for best results in long term investment and financial goals achivements. Last advise will be to start early in your life. It really pays well to start in the beginning itself else the dreams needs to adjust :)
Swetha Vasanth
Swetha Vasanth
6. September, 2021.
This is my first year service with the Holistic Team and I would say that they are very much helpful in creating a financial plan and follow ups during the year. I would definitely suggest them if anyone who is willing to proceed with their savings professionally.
Joseph Mathias
Joseph Mathias
6. September, 2021.
I came to know about Holistic Investment Planners online while searching for different investment ideas. Once I contacted them the journey was very smooth. Mr. Ramalingam explained all the aspects of Financial planning in detail and it opened my mind. I realized how important it is to have a Financial planning. Mr. Rajan suggested all the requirements as per my goals and made a Investment plan keeping in mind of my goals. I started my Investment journey with them. I wish I had done it some years back then it would have been in a different level. Review meetings were held every six month to check the implementation of the plan and check the results as per the requirements and to check if any changes required. Overall it was a good experience with Holistic Investment team and would like to continue in the years to come.
Srinvas Kannan
Srinvas Kannan
30. July, 2021.
I came across Holistic investment planners almost 5-6 years back, but I did not have the trust since I had met a few of them who did not sound promising. Then I started investing through a financial advisor of my friend. After 4 years of investing the returns were very low. I was disappointed and started looking for financial advisors when I came across Holistic investment. I had a detailed discussion about my goals and the way they would approach achieving my goal before deciding to switch my investments to them. After a thorough analysis of my then existing portfolios, they suggested new ones and we zeroed-in on 6 schemes/funds where our investment would be split. I am glad I made the decision of switching over and taking Holistic planner's advise, my returns are handsome and I only wish I could have taken their help/advise 5 years back itself. Neverthless, I would like to recommend their services for investment and financial advise if someone is serious about their investments.
Shivaram Andiappan Selvaraj
Shivaram Andiappan Selvaraj
3. July, 2021.
I got a free first time consultation. I got my doubts resolved. They also gave additional advises for investment planning which was also useful.
Nellai B
Nellai B
26. June, 2021.
I have been associated with them for the past three years. They are very professional and polite in answering all our questions. I have complete trust in their suggestions. I strongly recommend for anyone. I am looking forward to have strong and successful association with them.
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based on 61 reviews

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