Friday, February 1, 2008

Young guy suddenly thinking of Investment!!!

Today there were guys from our company's bank to talk about investments as it was nearing the end of financial year. Now guys like me i.e. young londas who are earning well, have no apparent responsibilities as they are not married or no need to support parents /family, tend to blow up there money. And think investment is for tomorrow, when we have more responsibilities or are married no need to think about it now. Well at least I used to think like that for last two year(the duration I have been earning my keep by self). Well thats is where we make the most elementary and naive mistake. We should actually invest more since we are young and not the other way round. And I also realized that I was losing out on lot of money and saving options.
Here are some hard facts about various investment option which gives tax breaks according to government rules:-
1. Under 80(c) the tax break is allowed on the following investment tools:-
(a.) ULIP (Unit Linked Insurance Plan)
(b.) ELSS (Equity Linked Saving Scheme)
(c.) LIC (Life Insurance Certificate)
(d.) Tution Fee of your kids
(e.) FD (Fixed Deposit)
(f.) NSC (National Saving Certificates)
(g.) PPF (Public Provident Fund)
Now under 80(c), the maximum a you are allowed to invest is between 1,00,000/- to 1,10,0000/- per financial annum.
2. Under 80(d) the tax break is allowed on the following investment tools:-
(a.) Medical Reimbursement
Now under 80(d), the maximum a you are allowed to invest is 15,000/- per financial annum.

Also the Lock-In period (for those who did not get it like me the first time - lock-in period is the minimum period for you need to remain invested in any above options to get the tax break) for various investment tools, so that we can benefit the tax break are:-
  1. FD has 5 yr lock-in
  2. PPF has 15yr lock-in
  3. ELSS has 3 yrs lock-in
Before I go, just a note, NAV means "Net Asset Value".ULIP and ELSS are calculated in terms of NAV and this is publicly publised everyday.

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