Your DIY For Optimizing Tax Savings and Financial Liquidity
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The countdown to meet our financial goals has begun. This new year, make your savings work double time: save tax and get best possible returns. Here, are a few financial instruments in which you can park your money for long-term investment and ensure quick access to funds, if required.
1.
2. National Savings Certificate (NSC): Post offices issue NSCs as a small savings scheme. You can invest in either 5-year or 10-year NSCs. One great advantage offered by NSCs is that there is no upper limit to the amount you want to invest, though tax benefits will be available on an amount of Rs 1.5 lakh or lower only.
3. Unit-linked
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4. Equity-linked Savings Scheme (ELSS): It is flexible with respect to investment duration, with a lock-in period of three years. There is no maximum limit to the amount you can invest in an ELSS, and investment of up to Rs 1.5 lakhs offers tax benefits. One of the many benefits of an ELSS is that no tax is levied on withdrawing your investment after the lock-in period.
5. National
6. Post Office Time Deposit (POTD) scheme: It is primarily a small saving scheme, with the duration ranging from 1 year to 5 years. You can earn an interest of about 8.50%, depending upon your investment period. Though the interest is paid annually, it is compounded quarterly. Further, you can now exit the scheme after 6 months, which makes it a handy investment option.
7. Banks’ Fixed Deposits (FDs): Banks offer 5-year FDs that serve the dual purpose of saving tax and investing money safely. You can invest a minimum of Rs 100 and a maximum of Rs 1.5 lakhs. Banks offer interest rate of 8%-9.75%, depending on the bank you choose. However, the interest earned on the fixed deposits is fully taxable.
Plan now and save for that rainy day.
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(About the author: The article has been written by By Naveen Kukreja, Director, Paisabazaar.com)
Image: Thinkstock
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