I have an investible surplus of Rs 80,000. I need advice on choosing tax-saving instruments. I won’t be needing these funds for at least three years, as I am taking a break to pursue higher studies abroad. Also, I don’t have any immediate requirements.
The choice of tax-savings instruments will depend on your investment horizon. Will you need this fund immediately after three years? Or, do you have a longer time-frame — say five to 15 years? In the first case, your options are limited to ELSS (a mutual fund which offers tax-savings under 80C option), where the lock-in period is only three years. However, with a longer-term horizon, doors will open for several options.
You may consider a tax-saving bank fixed deposit (bank interests are high now and as you have no salary income for the next couple of years, you don’t have to pay taxes on these). You may also consider National Savings Certificate. You may save up to Rs 1 lakh in these instruments. For the additional Rs 20,000 savings, your only option would be the designated tax-free bonds available in the market.
I am 27, recently married. My wife and I together earn about Rs 85,000 per month. Before marriage, my monthly savings were about Rs 20,000 (invested in equity funds — via a systematic investment plan in four funds of Rs 2,500 each, Rs 5,000 monthly in public provident fund and Rs 5,000 towards a recurring fixed deposit). Our collective monthly savings are now around Rs 35,000. How should we deploy the additional savings? Should we consider a unit-linked insurance plan, as we don’t have insurance plans in our portfolio currently?
You may continue with your monthly investment, which is very decently balanced. The additional (I presume your collective surplus now gone up to Rs 35,000) — may be used up in buying term insurance plans for each of you as well as for buying substantial health insurance cover for both. You may still find some surplus after this purchases, which may be routed to a balanced mutual fund scheme.
My sister is getting married in coming December. I have saved Rs 4 lakh for her wedding over the period of five years through investments in mutual funds. Should I withdraw the entire amount now or wait a few months, as my broker says the market should rise further in the next three months?
You have eight months in hand for the marriage. Plan the cash expenses meticulously. Draw up a schedule as to when each expense will occur and what would be the quantum in each of these occasions.
Encash your investments on this schedule. This may offer you an opportunity to keep the money in the market a little longer and that may prove to be useful.
The writer is director, Gliese Consulting. Views expressed are his own.
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