Invest in 4 Tax-Saving Investments to Actualize 'Better Late Than Never'
If you are in a high-income bracket, then you are no stranger to the pressures of paying a very high-income tax at the end of the financial year. From submitting rent receipts to investing in insurance plans, you do everything you can to save that tax.But before you rush into investing in a life insurance product to save tax, just ask yourself once if it is only one of the tax saving investment options or does it mean more.
Perhaps this is the right time you understood the difference between tax-saving instruments and tax-saving investments. Principally, they both mean the same. However, the critical difference between the two is that while the former is only meant to save tax, the latter is planned well in advance to act as insurance for life.
When you plan your tax saving investment options, the main idea behind them is to build a financial portfolio for your present and future needs. They will not only serve your family after you are gone but also work towards building a corpus of funds that will keep you financially independent after you stop working.
Don't worry if you haven't done that already. After all, it is better late than never!
Here are some tax saving investment options that will help you reach your financial goals.
Retirement planning is a process of setting financial goals and then taking necessary steps to achieve those goals. A rule of thumb dictates that you must have a way to replenish 70-90% of your pre-retirement income to maintain similar standards of living after retirement.
So, if you are planning to retire sometime in the next 15 years, then you need to start planning your investment options that will generate at least 70-90% of your current income after taxes when you retire. Therefore, saving alone will not suffice your life post-retirement. You would also have to invest wisely to get high returns and grow your savings exponentially, that too, at a faster rate. Starting right now will help you define your financial goals and allocate funds accordingly.
The right retirement plan will allow you long-term flexibility; only then would it make sense to start early. An ideal retirement plan is the one that offers you the option of enhancing your life cover as per your current needs. Apart from these options, you must also choose a plan that provides annuity options. Just be sure to assess the cost of these tax saving investment options to get the most viable retirement and pension solutions.
Child Education Plan
A child plan is a combination of investment and insurance that helps in financial planning for your kids' future needs. With the right strategy, you can protect your child's future with the child education plans that come with life insurance cover. Additionally, these plans also offer coverage to your child with payouts as they achieve milestones in their education.
A child education plan is necessary to add in your portfolio because the cost of education is rising exponentially, and life can be incredibly uncertain. The last thing you want is to hang your child's future in the balance by not acting in time.
Many parents in India often worry about their child's future, the fear that is compounded by the fact that they started late. However, it is never too late to start because there are a dozen child plan options that come loaded with rewards and returns to protect your little ones.
By starting now, you can not only avail of the tax benefits but also safeguard your child's future against eventualities, such as untimely demise. There are many ways to supplement the child plan with insurance and rider options that make the coverage more comprehensive and a lot more than just tax saving instrument.
Life insurance plans are a critical investment and tax saving instrument because it helps fortify your defences against uncertainties of life. While it is always better to start investing early, it is even better to be late than never. The sooner you start, the cheaper your premiums will be. Don't delay any more than you already have and look for term life insurance options to get huge returns on low investment.
However, if you want it to do its job in protecting your family's financial wellbeing, then consider a cover at least 15-20 times your current annual income. This would help your family pay for their daily expenses as well as give them enough to live a comfortable life. Besides, don't forget that life insurance is considered as one of the best tax saving investment options for the money you save on taxes.The insurance premium is eligible for tax deduction under Section 80C of the Income Tax Act.
The saving plan offers a disciplined approach to the investor. It not only ensures steady returns throughout the term but also gives you the option to choose monthly payouts or a lumpsum amount as per your policy. But most importantly, these are life insurance plans that give you additional tax benefits along with terminal illness benefits, death benefits, and more.
Your savings plan should be a tax saving investment option that offers competitive features such as flexibility to withdraw money for emergency needs or the ability to enhance coverage to maximize plan benefits.
If you haven't started investing in a savings plan, you must do so right now because it will help develop a habit of saving, lower your tax liability, and also protect your future financial interests.
There are many such tax saving investment options offered by insurers like Max Life Insurance that are geared towards wealth creation and financial security. They are available at affordable premiums and offer a host of benefits, other than tax saving.