Here are some common mistakes, when your focus is only on tax savings:
1. Not starting early:All financial planning and investments should be done in April(beginning of financial year), and not in March. Dodging decisions till the n-th hour is not just a financial liability, but also reduces the returns on investments, and your long-term goals.
2. Compromise of personal financial goals:Most tax saving schemes come with a lock in period, and often investors sign up for it without taking into consideration the tenure, exit load or understanding the instruments in long term.
3. Purchasing higher than can be maintained:While every Indian household dreams of having their own home, often in a bid to save taxes via 80C and 24B- investors consider this as an option, without realizing the immediacy of financial liability it may result in. Purchasing a property is a long-term commitment and it should either serve its purpose as an investment or fulfil your purpose of stay.
4. Overboard with Insurance:People tend to buy multiple health and life insurance policies in order to save taxes just because insurers quickly process the premium receipts you need at the end of the year. This approach is wrong, for two reasons: one, you invest in wrong products, and two, buy the cover of an inappropriate amount.
Financial planning should come first before tax saving. And the right time to finalise investments is in April, and not March (end of financial year). Explore all avenues to save taxes and how much more you need to invest, in order to fulfill long term goals. Instead of making tax-saving investments at the last moment, it is better to spread the amount throughout the year to avoid stretching your finances.
Click here to visit our personalized online advisor that gives you the financial expertise you need.
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.
Disadvantages of Early Retirement - What Happens When You're Not Working?
Early retirement seems to be good, many people enjoy life without working especially with extra earnings. But they are not aware about the cons. Lets explore the disadvantages of retiring early to save your retirement life.
5 Benefits of Health Insurance that Makes it a Must Have Cover
Here are the 5 benefits of health insurance that makes it a must to cover
When Should You Withdraw Money from a Mutual Fund?
In case of a sudden change in fund strategy or an underperformance scheme for more than 3-4 years, it makes sense to withdraw money.
How To Apply For Personal Loan
Applying for a personal loan has become extremely easy these days. With the increase in applicants, banks and other financial institutions have made the process very simple.