Plan your investments wisely to get Tax benefits

Have you ever wondered if you could save your money and get a chance to grow your wealth? This is apart from the fact you can also save on your taxes. This is not just a hypothetical situation. Investing your money in the right kind of fund can help you not only save on your tax but also give you a chance to generate wealth.

Investing your money into ELSS-Equity Linked Savings Scheme is that special tool that can make the above hypothetical situation turn into reality.

As per Section 80C of the Income Tax Act you can invest up to Rs 1,50,000. On that investment, you can save a maximum of Rs 46,800 in taxes. While many traditional savings can help you do the same, there are very few tools that can generate better returns on your investments.

Goals Matter

If you are saving with no investment objective in mind, this exercise becomes futile. Apart from saving on taxes, there is no real meaning to it. However, saving and investing after keeping your objectives in mind would mean that you have a clear vision of what you want to achieve.

List down what you would like to do in the next 3, 5, 7 and 10 years. Add milestones like education, marriage, vacation, buying your own house, retirement plans and figure out when you want to achieve them. This small list can help you understand how much you would want to invest and when do you want to achieve these.

One of the best thing about investing in ELSS is the time frame of investment. If you have short-term goals, you can choose a fund for 3 years. This lock-in period gives you the tax benefit that you are looking for as well as enough time for the wealth to grow.

Actions speak louder

Just thinking about saving and generating wealth is not enough. You need to start somewhere. You can either invest a lumpsum into a fund or invest a little bit every month. Systematic Investment Plan or SIP can help you grow as you get rewarded with the ‘power of compounding’. The Magic of the ‘power of compounding’ lies in the fact that any return you gain on your investment gets added to your principal amount, which in turn can grow your wealth.

Before you invest in any kind of investment you should understand the risk factor involved and check your risk appetite. Choose a fund that goes well with your investment objectives and your risk appetite, you can see your wealth grow while also saving tax.

The figures mentioned above are for illustrative purposes only. Actual tax benefit will vary from person to person. Tax benefit shown here is calculated at the highest tax slab rate of 31.2% (excluding surcharge if any) and including education cess on the maximum allowable deduction of 1,50,000 under Section 80C of the Income Tax Act, 1961. The user/investor needs to verify all the facts and circumstances with the prevailing tax statutes and seek appropriate professional advice before acting on the basis of the above information. Tax laws are subject to amendments from time to time.

Standard Chartered Bank does not provide any investment advisory services under the wealth proposition. Standard Chartered Bank in its capacity of a distributor of mutual funds or while referring any other third party financial products may offer advice which is incidental to its activity of distribution/referral. Standard Chartered Bank will not be charging any fee/consideration for such advice and such advice should not be construed as ‘Investment Advice’ as defined in the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 or otherwise.

Mutual Fund Investments are subject to market risk. Read scheme related documents carefully prior to investing. Past performance is not indicative of future returns