Investment Tips for Opting New Tax Regime

One of the major announcements of Union Budget 2020 was the unveiling of the new tax regime . While tax rates under the new regime are low, it has done away with 70-odd exemptions of the old regime.
In other words, around 70 investments that qualified for tax exemption in the old regime will not fetch any tax benefit in the new regime. If you are opting for the new regime, here are some effective investment tips following which can compound your wealth and achieve financial goals with ease.

Just like in the old tax regime, investing money in the new regime calls for a holistic knowledge about your financial goals and prioritising them. Take into account your risk appetite and continue investing for high priority goals such as children’s higher education, their marriage, down payment for a new house, and your retirement.While there are other goals towards which you can invest if you have the required capital, high priority and non-negotiable goals should be your prime focus.

Emergencies often come unannounced and can derail even the most well-laid financial plans. Therefore, make sure to direct a part of your investments in building an emergency corpus equivalent to six-eight months’ expenses.You can do so by investing in a mix of market-linked and fixed-return instruments. While investing ensure that the corpus is easily accessible in times of need. To put it otherwise, you should be able to liquidate it easily.

While investing money in life and health insurance will not offer any tax relief in the new tax regime, you must still invest in them for all-round protection. Note that the utility of life and health insurance goes much beyond tax-savings.While life insurance hedges your dependents from financial insecurities arising in your absence, health insurance cushions your savings from taking a dip in the face of a medical crisis. Therefore, make sure you have adequate life and health insurance coverage.

Diversification is one of the core tenets of investing. It ensures the even if one asset class crashes, others shore up your portfolio. Therefore, invest your money across asset classes to make your portfolio better shock-resistant.A well-diversified portfolio not only prevents the gains from eroding due to market fluctuations but also ensures you are well on track of achieving your goals.

If observed closely, investing money in the new tax regime isn’t radically different from the old regime. Keeping in mind the above things while investing will help you maximise returns from your investments and be on your path to financial prosperity.Ready to make the most of your money? Start your tax planning journey now!

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.