Finity Weekly Update (Issue #8): Tax saving under Section 80C and other updates
The avoidance of taxes is the only intellectual pursuit that carries any reward.
— John Maynard Keynes
Quite often, we rush to make the least thought-through tax saving investment (the easiest like insurance plan & PPF being the most popular) with a short-term view to save on taxes.
Have you ever wondered if the same investment could also help you build wealth and take you closer to your financial goals? Probably not.
Here’s a cheat-sheet to help you choose the best tax-saving option to utilize your section 80C’s INR 1.5 Lakh tax-deductible limit.
Hint: Look for the lowest lock-in & highest potential return.
Options available under the section 80C basket:
|Tax Saving Products||Lock in period||Expected Returns|
|Equity Linked Saving Scheme (ELSS) Mutual Funds||3 Years||12% - 15%|
|Public Provident Fund (PPF)||15 Years||8.00%|
|National Savings Certificate||5 Years||8.00%|
|5 Years Tax - Saving Fixed Deposit||5 Years||7% - 7.5%|
|Insurance||10 - 15 Years||4.5 % - 5%|
Over this period, he saved almost INR 4.5 lakhs in yearly taxes while his investment has grown to INR 32 Lakhs! A total gain of INR 21.5 Lakhs in ten years!
What happened there? It’s the power of equity, compounding and a wise tax-saving investment that made all the difference.
We recommend you to watch a brief video by Nirav Karkera (who heads the Research team at Finity) listing the best tax-saving funds for year 2018-19:
Equity as an asset class is by far the most dominant when it comes to building wealth. A classic display of the power of equity was the performance of TCS shares in the past week.
Shares of TCS gained the most this week. Since it got a clean-chit in the controversial racial-discrimination lawsuit filed in the U.S. Digital funds have been the biggest winners along with TCS.
|Fund Name||TCS (%)|
|Tata Digital India||11.96%
|Aditya Birla Sun Life Digital India fund||11.70%
|Axis Long Term Equity Fund||8.44%
|Axis Focused 25 Fund||7.60%
- Axis Mutual Fund has decided to change the load under Axis Small Cap Fund with effect from November 29, 2018. Now, for units in excess of 10% of the investment, 1% will be charged for redemption within 12 months.
- Principal Mutual Fund has decided to resume fresh investment in Principal Cash Management Fund, Principal Ultra Short Term Fund, Principal Low Duration Fund & Principal Arbitrage Fund with effect from Dec 03, 2018.