Am writing this blog for people who are fresh out of college and are starting their careers. This is also applicable for people who are planning for their financial savings. The content am going to mention is not new or not that it is available nowhere in the web but I believe this might help at least a few from going down the wrong path that many of us who have already done. Am not going to explain or help someone on how to plan their finances as am no expert or haven't specialized in it either.
80C Savings - The first mistake everyone makes when planning for this savings is not thinking much of various options available. I would recommend everyone to go through the web and checkout on various options available on which one could claim the 80C rebate of 1Lakh ( as on Feb 18 2013).
Points to remember :
1) 80 C- The 1 lakh amount includes your PF (provident fund)
2) Insurance is not the only way for 80 C - I believe this is how the insurance agents trap the people who start with their careers.
3) Other avenues are the ELSS ( Equity linked Savings Scheme) , PPF , NSC bonds etc ( there are many such provisions as well)
4) PPF, I believe is a very good instrument for various reasons - The major being that the amount accrued is not taxed when you . Also you can pay varying amounts on each year starting from as low as 500.
Well the above were to just provide some direction for folks on 80 C and where else to look at apart from Insurance policies. There can be more than these avenues for 80 C.
People who are starting new in Insurance might not be so aware that there are two types of Life insurance policies as on date. "Endowment" and "Term".
Endowment Insurance policies - These are policies which would provide you a life cover as well as provide returns ( in case one survives the term).
Term Insurance policies - These are plain vanilla policies which would just provide you a life cover.
Most of the LIC agents would try selling you the "Endowment" policies citing that you get the best of both worlds "life cover" and "returns" as well and add to that "80 C " savings. Well don't fall for this bait. Why would someone go out of their way to do you a favor. I believe no one in world would do that without something in it for them, These policies have hefty agent commissions. The agents get a good cut out of the insurance premiums that you are paying. The returns are going to be very meager as well-You might end up paying a sum of 5L and have a life cover of 5L - may be add to that another 5L of bonus so a total of 10 L for a sum of 5L ).
Rather go for a "TERM" insurance policy [I strongly bet no LIC agent would have told you first about this - if he has he is truly your friend :) ]
(a) They come with cheap premiums
(b) You can buy most of these online by yourselves now without the need for an intermediate/agent.Even LIC has a e-term policy
And for returns in 80c use the following saving instruments
(a)if you want to play safe go for PPF ( 8.5 % interest rate as on date which is way good than the LIC policies' returns)
(b)Check if your company allows for VPF - Voluntary Provident Fund
(c)If you are risk averse and young , invest in ELSS or Tax Saving Mutual funds
80C Savings - The first mistake everyone makes when planning for this savings is not thinking much of various options available. I would recommend everyone to go through the web and checkout on various options available on which one could claim the 80C rebate of 1Lakh ( as on Feb 18 2013).
Points to remember :
1) 80 C- The 1 lakh amount includes your PF (provident fund)
2) Insurance is not the only way for 80 C - I believe this is how the insurance agents trap the people who start with their careers.
3) Other avenues are the ELSS ( Equity linked Savings Scheme) , PPF , NSC bonds etc ( there are many such provisions as well)
4) PPF, I believe is a very good instrument for various reasons - The major being that the amount accrued is not taxed when you . Also you can pay varying amounts on each year starting from as low as 500.
Well the above were to just provide some direction for folks on 80 C and where else to look at apart from Insurance policies. There can be more than these avenues for 80 C.
People who are starting new in Insurance might not be so aware that there are two types of Life insurance policies as on date. "Endowment" and "Term".
Endowment Insurance policies - These are policies which would provide you a life cover as well as provide returns ( in case one survives the term).
Term Insurance policies - These are plain vanilla policies which would just provide you a life cover.
Most of the LIC agents would try selling you the "Endowment" policies citing that you get the best of both worlds "life cover" and "returns" as well and add to that "80 C " savings. Well don't fall for this bait. Why would someone go out of their way to do you a favor. I believe no one in world would do that without something in it for them, These policies have hefty agent commissions. The agents get a good cut out of the insurance premiums that you are paying. The returns are going to be very meager as well-You might end up paying a sum of 5L and have a life cover of 5L - may be add to that another 5L of bonus so a total of 10 L for a sum of 5L ).
Rather go for a "TERM" insurance policy [I strongly bet no LIC agent would have told you first about this - if he has he is truly your friend :) ]
(a) They come with cheap premiums
(b) You can buy most of these online by yourselves now without the need for an intermediate/agent.Even LIC has a e-term policy
And for returns in 80c use the following saving instruments
(a)if you want to play safe go for PPF ( 8.5 % interest rate as on date which is way good than the LIC policies' returns)
(b)Check if your company allows for VPF - Voluntary Provident Fund
(c)If you are risk averse and young , invest in ELSS or Tax Saving Mutual funds
No comments:
Post a Comment