Benjamin Frankiln once famously said, “In this world nothing is certain but death and taxes.” We didn’t want to start on such a negative note. But, it’s kinda funny. No? Never mind. The point is – saving tax seems like such a huge burden. But it’s not, if it can assist you in long-term wealth creation for all your goals!

How much should you invest?
One should never think of mutual funds investment as a tax saving instrument. The fact is that under Section 80C of Income Tax Act, you have an annual investment limit of Rs.1,50,000. Anyone who wants to save tax invests that much and thinks his job is done for the year. Problem is that it’s still your money that’s making more money. So don’t think of 1.5 lakh as an investment limit, invest as much as you can through an SIP. That way, you won’t even have to arrange the whole money at one go and you might end up investing much more than 1.5 lakhs to achieve your goals.

Types of tax-saving instruments
Equity Linked Saving Schemes (ELSS) offers you a simple way to get tax benefits, while aiming to make the most of the potential of the equity markets. Especially for those who have long term goals, ELSS is the best tax-saving instrument available in the market. Long term capital gains from these funds are tax-free and the lock in period is only 3 years.

Don’t wait for the end of financial year
We cannot emphasise this enough that you must not wait for the financial year end to start investing. The reasons are simple. It’s hard to invest all the money in one go, which is why you must break it down into easy instalments by starting an SIP. If the markets are high, your return will be low or the chances are your returns can be in the negative too. And finally, when you invest every month instead of every year, you learn more about the markets, the right investment instruments and from your mistakes.

Make the tax-saving investment plans work in your favour. It’s your money that’s saving tax and at the same time making more money. So, instead of thinking of tax-saving, think of a trip to Amsterdam. Believe us, it’s beautiful.

Here are funds you can start investing in to not just save tax but to create wealth:

NameValue Research RatingsReturns (3 yrs)Returns (5 yrs)
Axis Long Term Equity Fund – Growth5-Star15.70%12.11%
Motilal Oswal Long Term Equity Fund – Growth5-Star11.16%NA
Aditya Birla Sun Life Tax Relief’96 – Growth5-Star11.03%11.00%

Figures indicate annualised historical returns. Returns are as on 11th November 2019.

Check out Mutual Funds on Freecharge here.

*Mutual fund investments are subject to market risks, read all scheme related documents carefully.

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