No doubt you're astonished at the amount you pay as taxes every
year. But you could significantly reduce that amount if you want to. If
you're hoping to save money on taxes, then the best way to do it is to
invest. While you could trod on the tried and tested method of investing
in the Public Provident Fund (PFF) or the National Savings Certificate
(NSC), you should also try to invest in mutual funds.
You might be surprised, as you expect taxation on mutual funds - but you need to know where you can invest your money so that you can limit the amount of taxes you pay on it. The best way to go is Equity Linked Savings Schemes or ELSS. They're also rather popularly called tax saver mutual funds. What's the big deal about it? Well, on the lock in period does exist - it is considerably lower than for either the PFF or the NSC. The period is for three years, against the PFF's 15 years and the NSC's 6 years. There are different funds that you can choose from, ranging from those that give your growth or income; depending on what it is you want from the funds. The interest rates are better for ELSS when you compare it to either the NSC or the PFF.
Mid-caps and small caps can be quite a risky venture, so if you're investing make sure you have sound knowledge of what you're doing. You need to know your documents well and ensure you do your research before you go ahead and put money in. Because once you've put your money in, you're stuck there for three years.
You might be surprised, as you expect taxation on mutual funds - but you need to know where you can invest your money so that you can limit the amount of taxes you pay on it. The best way to go is Equity Linked Savings Schemes or ELSS. They're also rather popularly called tax saver mutual funds. What's the big deal about it? Well, on the lock in period does exist - it is considerably lower than for either the PFF or the NSC. The period is for three years, against the PFF's 15 years and the NSC's 6 years. There are different funds that you can choose from, ranging from those that give your growth or income; depending on what it is you want from the funds. The interest rates are better for ELSS when you compare it to either the NSC or the PFF.
Where to Invest Money Wisely in India for Good Returns?
When you're looking for a mutual fund to invest in, make sure you compare these factors with each other, so that you get an idea of what you're in for. The expense ratio is an important consideration. It shows how much of your money is going to expenses of the management before the rest goes towards investment. Needless to say, the expense ratio that is lower is better for you. The Sharpe ratio also needs an eye kept on it. This shows the level of fluctuations that the fund undergoes - showing whether or not the decision-making is sound. Sound decisions are likely to give a stable ratio; and less than sound decisions could make the ratio fluctuate madly. So a stable ratio is what you're looking for as far as the Sharpe ratio is concerned. Other than this, you can also choose from the large, mid and small cap investment opportunities. Generally, the large caps are preferred for the ELSS.Mid-caps and small caps can be quite a risky venture, so if you're investing make sure you have sound knowledge of what you're doing. You need to know your documents well and ensure you do your research before you go ahead and put money in. Because once you've put your money in, you're stuck there for three years.
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