Pay attention to liquidity needs while selecting tax saving instruments

Investors in higher tax brackets may avoid products taxed at the slab rate

Sarbajeet K Sen New Delhi
INVESTMENT, PLANS, SAVINGS, mf, mutual funds, investors, equity, pension, NPS, funds

If you have not begun your tax-saving investments yet, it is time to start the process. Postponing it for the fourth quarter could result in a cash crunch. Tax-saving related mistakes occur primarily when investors choose products in haste at the last moment. Also, these investments should not just be made for tax saving; they should also help the investor achieve his financial goals. Here are a few common mistakes that should be avoided:
Investments not linked to goals
People often choose products like equity-linked savings schemes (ELSS) because their past returns are good. But before doing so, the investor should check if his risk profile, investment horizon and asset allocation permit him to invest in an equity product. If not, he should opt for a fixed-income instrument. “A variety of products allow you to get the benefit of tax deduction under Section 80C, such as Public Provident Fund (PPF), Unit Linked Insurance P

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