No matter what people say, money is a crucial part of living. You can’t pay your bills or provide for your family without money. You work hard, day and night, to earn the money you need, even for the simplest pleasures in life. Aside from permanent jobs, you may be driven to side hustles to make more money in order to make ends meet. Therefore, giving away so much of it in taxes seems hard.
The problem is that only some are aware of the different means to save up on taxes. Instead of just giving it away, you could invest it in tax-deductible options. Not only do you save taxes, but you also protect yourself in case of emergencies and build a corpus for the future.
Today, let’s discuss some authorised ways of protecting your interests with tax-saving investments.
Top tax-saving investments to help preserve your money
These days, you will find online investment tips all over the internet, but very few are really worth the name. Instead of blindly trusting Whatsapp and telegram groups claiming to share stock tips, invest your money in schemes that are guaranteed to provide returns and take care of you when disaster strikes. After all, markets fluctuate, but a guaranteed return on periodic investment is unlikely to change.
So, here are some online investment tips that actually help build a corpus and save money in taxes:
- Health insurance:
Medical emergencies are among the most unexpected expenditures. Since they are hard to anticipate, it is always a good idea to keep health insurance handy with appropriate sum insured and riders.
The premiums paid are essentially tax-saving investments under Section 80D that pay for your medical expenses, thus securing unprecedented expenses and taking care of your family’s wellbeing.
- ULIPs:
Unit-linked Insurance Plans are another form of insurance wherein part of your premiums are preserved towards paying for your claims. The remainder of your money is invested smartly in the market by the insurance provider. Among online investment tips, ULIPs are excellent choices for side hustlers.
- Endowment plans of life insurance:
Term life insurance is a form of security for your family in case of untimely death. You can choose the duration of your term life insurance as well as opt to be a participating or non-participating investor.
If you are a participating member, you can earn bonuses. They are even available as monthly payments, so you get back what you invest. Under Section 80C, the premiums on life insurance plans are tax deductible, so the benefits are multifold.
- Money-back plans in life insurance:
Here’s another online investment tip in the form of life insurance that helps you save on taxes and provides you with a source of cash flow. You can choose money-back insurance plans for a certain duration and specify the intervals at which the insurance provider will pay some of the money from your sum insured.
Let’s say you opt for quarterly payments in a 10-year tenure. You get a lumpsum amount during the first 2 years and 6 months, then at the end of the 5th year, and again at the 7-year 6-month marker. At the end of the tenure, the life insurance plan matures, and the insurance provider will settle the remaining amount. However, if the insured meets an untimely demise before the tenure ends, let’s say in the 9th year, then the life insurance pays for the entire sum insured despite periodic payouts made before.
- National Pension System:
These are tax-saving investments that help build a corpus for your retirement years. Different taxation laws apply such as Section 80 CCD(1) and (1B) based on your age and type of NPS investments. Either way, you save some money on taxes during the course of your working career, and have funds available in trying times after retirement when working becomes difficult.
- Sukanya Samriddhi Yojna:
For parents with young female children, the Sukanya Samriddhi Yojana is a viable online investment tip to secure your little girl’s future. You can open the account before your girl’s 10th birthday and set aside anything from INR 250 to INR 1.5 lacs as per your choice. These tax-saving investments offer huge rates of interest, and your child can use the funds to either pay for their higher education or marital arrangements once they turn 18. It certainly takes the load off to brighten your daughter’s future with the education she desires to become her own person.
- Public Provident Fund:
Another excellent tax-saving investment is your provident funds. You can invest small amounts of money over the course of your life for a large return on investment in the future. These savings are quite reliable as the returns are guaranteed, and the premiums as well as the maturity benefits, are tax deductible under Section 80C.
- National Savings Certificate:
Apart from the usual online investment tips, the NSC is a form of tax-saving investment that you can employ through the post office. For the first 4 years, your investments and returns, which can be reinvested, are tax deductible. However, in the fifth year, the interest that you earned will be subject to taxation.
- Fixed Deposits:
While the above-mentioned tax-saving investments and online investment tips can yield varying results, there is one safe form of investment that never fails. You can open a fixed deposit at any time during the course of your life and start putting aside money every month for a rainy day. If you choose a tenure plan for 5 years and above, it is tax deductible. The rate of interest may not be as high as endowment plans, SSY, or ULIPs, but it serves as a savings fund. Also, the interest you earn will be taxable. If you are above 60 years, then the income from interests is tax-free up to INR 50,000 as per Section 80TTB, and amounts over that will be taxable.
There are other tax-saving investments in the form of Employee Provident Funds, Kisan, Vikas Yatra, and more. The trick is to select the right plan for you and start investing as early as possible.
Conclusion
There is a myriad of online investment tips but selecting the right one for you and your family will aid in securing your financial future. While side hustles are excellent means to earn extra money, you need to conserve your cash flow and prepare for the future.
Insurance plans, ULIPs, and Pension Funds as they provide constant cash flow as well as take care of your needs during tough times. You can mix them up with other tax-saving investments to further solidify your financial well-being.
