I, 36, have four endowment plans. I am planning to buy one more term plan, with an assured sum of Rs 50 lakh, to increase my risk coverage. My investments include a public provident fund (Rs 80,000) and mutual funds (two investments: Rs 80,000 and systematic investment plans (SIP) in four tax-saver and two large-cap funds). I am paying more than Rs 50,000 annually, as premium towards insurance policies. How can I consolidate my insurance and mutual fund (MF) holdings?
You can consider making your endowment policies paid-up and switch to cheaper term insurance for cover. Additional savings can be invested via SIP into diversified MFs for building a corpus to fund further goals. Also, instead of investing in too many funds, you must invest in five good ones. One of these could be a monthly income plan to give your portfolio a clear debt exposure. With interest rates peaking, this investment can give you a decent return.
I, 23, have been working in an information technology firm for the past six months. My annual package is Rs 5.25 lakh. I and my employer contribute around Rs 4,000 towards the employees' provident fund (EPF). My monthly tax payment (after declaration of savings of Rs 75,000) is approximately Rs 350. My yearly salary break-up is as follows:
- Basic = Rs 2.08 lakh
- FBP (dearness, housing and so on) = Rs 2.44 lakh
- Variable = Rs 0.40 lakh
Which are the best investment avenues eligible under section 80c. Also, which are the leading equity-linked savings schemes (ELSS)?
First, you must use the section 80c benefits to the hilt and nullify your taxes. The eligible schemes in which you may invest are the new pension scheme, ELSS, public provident fund and so on. All these offer tax-free returns.
NPS is a low-cost pension scheme launched by the government. It has three investment classes, namely, government securities, corporate bonds/fixed deposits and equity index funds. You could go for an aggressive option, since you are young. Of all these, ELSS has the lowest lock-in period of three years. Also, returns of ELSS over the long term are far better than any other option in the past and the capital gains are tax free. Since you are already contributing towards the EPF, for the balance amount to be invested for saving taxes, you can opt for any two ELSS schemes, chosen after evaluation of their past performance.
The writer is director, Gliese Consulting. The views expressed are his own. Send your queries to yourmoney@bsmail.in
