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NPS Account: If you want to save more on your tax, then the NPS account must be your first priority. Under the section 80 CCD (1b), if you invest up to Rs. 50,000, there will be an additional tax benefit, under section 80C, if you can invest more than 1.5 lakh, you can get a tax deduction. If you are remaining in the tax bracket of 30%, you can easily cut off Rs.15000 from your tax liability.
Some financial experts are of opinion that equity mutual funds can procure better returns than the NPS. Though the equity investments are not eligible for the tax benefits but their superior returns can make up for it. In case of the NPS, after the age of 60 years, minimum of 40% are to be kept for annuity for the pension. The withdrawals are generally taxable and the annuities are taxed at the normal rate. Therefore, the pension in each month will be a combination of both the interest and principal but the whole amount is taxable.
Public Provident Fund (PPF): PPF can be suitable for the investors with low risk appetite who can save the money for a long period of time or for some specific financial goal like marriage or retirement planning. For balancing the financial portfolio, the high risk profile investors can also invest in PPF. Both the PPF and the EPF (Employee Provident Fund) holders are eligible for the tax benefits. Under Section 80 C, an investor can invest up to 1.5 lakh to be eligible in obtaining the tax benefit. The investors are eligible in investing more than 1.5 lakh but they will not obtain the tax benefit for that. As the interest rate of PPF is linked with the market, it is customized every year. Though the maturity period of PPF is 15 years, you are eligible in withdrawing after 6 years. The withdrawal amount must not exceed half of the balance after the fourth or immediate previous year, whichever is lower.
Making money is not enough if you have no idea how to invest it wisely. A smart man always makes sure to be fully prepared for future financial needs and at every step and finds out a way to double his hard earned money. However, the biggest mystery is how and where to invest? Your financial planning will only be successful if you have bit of knowledge about investment planning options. So, if you are seeking some advice to get the best returns on your investment, your search ends here.
Before exploring the options available in the market for financial planning, let’s talk about the types of investment plans. Basically, these are of two types-
- ULIP (Unit Linked Investment Planning) – Here, your premium is invested in various kinds of funds such as stocks, shares, etc and you receive money on the basis of the performance of these funds. Thus, it is volatile in nature.
- Traditional Investment- It ensures you receive the promised return amount after the maturity and thus is a low-risk investment plan.
