nformation provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. , its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.
Most individuals begin tax planning when the due date for filing income tax return is around the corner. However, it is prudent to start your tax planning earlier as it gives you more time to make a good estimate of your income and gains.
One easy way to calculate your tax liability is to print the previous year’s return and write your estimate of current year’s numbers. This can be a ballpark estimate, and once you write the new numbers, you can use them to estimate your taxable income and then determine what tax bracket your income falls into.
Plan your investments
To reduce your tax liability, you can take advantage of various tax deductions and exemptions. For instance, if your taxable income is expected to be `8 lakh at the end of the financial year, then you can start investing in tax-saving investments.
From a tax planning standpoint, there are several tax-saving options offering deductions under Section 80C, Section 80D, etc. Additionally, expenses such as interest paid on home loan, repayment of the principal amount of a home loan, tuition fees for children can be claimed as deduction from gross taxable income thereby reducing your tax liability. You can take advantage of Section 80C by investing in ELSS, PPF, NSC, etc.
However, the most efficient way to take advantage of this section is to invest in term insurance and Unit-linked insurance plans (Ulips). They offer tax benefits under Section 80C for premiums paid in the given financial year. But, most importantly, the returns and the maturity benefits that you receive are completely tax-free under section 10 (10D) of I-T Act.
Remember that early planning of investments will give you more time to select the most efficient option which can give you higher returns, more liquidity, and most importantly, will help you to accomplish your goals in a better way.
For a smooth tax filing process, all your tax-related documents ought to be kept securely. If you are spending on things for which you can claim deductions such as medical bills and travel bills, keep receipts of all such transactions handy. This won’t just accelerate your filing process, yet additionally, diminish the odds of missed details and errors.
File ITR well in advance
To avoid any mistakes, it is best to file your income tax returns well before the due date as any mistake might result in a notice from the I-T department. Moreover, procrastinating tax-filing till the last minute could also create problems, especially in case of transnational glitches or technical errors.
Therefore, file your tax in advance and be prepared with all relevant documents such as salary slips, eligible deductions, and investment documents to ensure a smooth filing process. Early tax planning early will allow you to think better and make wise decisions with respect to investments. Remember, choosing the right tax-saving investments can not only help you reduce your tax liability but also meet your set financial goals.
We all know the story of the slow tortoise that comes out and wins in a race against the fast rabbit. Your journey towards ample savings for major future needs like child's higher education and retirement has a few striking similarities with that of the tortoise in the childhood story. This is more so if you have a preference for steady growth along with life insurance protection for your family. Here's how.
Steady long-term benefits of traditional plans
When you invest in a traditional life insurance plan that provides you with bonus declared from time to time during the plan's term as well as benefits like guaranteed additions, you need to stay focused to finish the long journey just like the tortoise. Firstly, in the absence of adequate savings to support your family in your absence, you need life insurance protection. This protection helps your family to not only meet regular expenses in your absence, but also achieve major financial goals such as child's higher education or saving for retirement.
Most traditional plans provide you with a bonus from time to time during the term of the plan. This amount, a percentage of the maturity sum assured, keeps growing your accumulated savings. There could also be guaranteed additions, again a percentage of the maturity sum assured, which add to your accumulated savings.
Why staying invested for the long term is rewarding
The long term benefits of staying invested in a life insurance plan is a major reason why many people earmark life insurance plans for individual financial goals. But the key to success is staying invested and making the money grow with the help of different bonuses and guaranteed additions. In that sense, buying a life insurance policy is pretty much like planting a shade-providing and fruit-bearing tree. Just as you need to provide water and nutrients on a regular basis to nurture the growth of the tree, you need to keep paying your premiums regularly and stay invested in the plan in order to meet your financial goals. Paying premiums regularly also ensures your loved ones get life insurance protection in case of any unfortunate circumstances.
Needless to say, as in the case with all investments, the penalty for early exits is stiff. This is because you lose out on the benefits of compounded growth where thanks to regular investments over time, you benefit from the constant rate of growth of an ever-growing corpus of accumulated savings. Here is a simple illustration.
Just like the tortoise in the childhood story that eventually won the race by keeping a regular pace and never losing sight of its goal, so also, in the case of life insurance plans, to accumulate ample savings through long-term benefits like bonus and guaranteed additions, one needs to stay invested in the plan and keep focused on long-term financial goals
Much like all insurance products, life insurance makes your life easy by taking the stress out that stems from the unpredictability of life. But when it actually comes to taking a policy, most investors get confused with the overload of information and overwhelmed with the premium amount and want to pay as little as possible. If the cost associated with the insurance premiums has negatively affected your decision of buying life insurance premium, then tips below might help you find different ways to lower your life insurance premiums without burning a hole in your pocket.
It goes without saying, the younger you are the lesser the cost of your life insurance premium. Starting at a young age is the key to lowering your life insurance premium because your age has a direct impact on your rate of premium. Simply put, if you take your policy as early as possible you will qualify for a cheaper premium versus when you’re older as there’s less risk associated with a young policyholder. The older you get, higher are the premiums being charged. To save extra cost on your premiums, it is highly advisable to buy a policy in your early 20s.
The irony is that the time you would most need a life insurance policy- on the heels of your health issues, would be a time you would least get it or the premiums would be higher. Insurance companies get a medical check-up done before issuing you a policy which reveals your health conditions. Basis which insurance companies decide the rate of premium. This is because insurers are well aware of life-threatening habits and tend to charge a higher amount on the basis of that.
While buying a life insurance policy, you get the flexibility of paying the premium in a number of ways such as annually, half-yearly or monthly premiums. Alternatively, the premiums can also be paid as lump sum. In case, you choose a monthly premium as your mode of premium payment and skip on the dates when it comes to making the monthly premium on the due date, then there are higher chances that your policy will lapse. So make sure you do not miss one.
Financial freedom means different things to different people. It is all about having the freedom to make choices, not based on what your bank balance dictates but based on what your heart desires. Financial freedom is something that will not happen overnight; rather it is a journey. Each day, through the choices you make, either you move closer or farther from your financial freedom. Here are five steps which you can start implementing now, so that you can achieve financial freedom in the near future.
Talk to your partner
Most couples never discuss their financial goals. If you are married or in a relationship, talk to your spouse about what you want to accomplish. Have a brief conversation about your financial goals and what kind of lifestyle you want, etc. Discuss and take important actions such as paying debt, gaining control over spending, saving for children education, retirement, tax planning, early retirement, and the like.
Make a budget and adhere
Budgeting is a basic tool but often overlooked by many. If you keep on spending more than what you earn, definitely you are not moving towards financial freedom. A budget lays out all your expenses and outlines how much you can afford to allocate for each expense. If you are spending more than what you have or earn, a budget will spot this so that you will know where you should cut back.
Pay back your debts
Paying off debt should be one of your priorities. Having debt just weighs you down and prevents you from achieving financial freedom. There are multiple techniques to pay off your debt ranging from snowball method to avalanche method. Choose the best which works for your current financial situation. Also look for ways and means to decrease your expenses and redirect those savings towards paying back your debt. Expediting your debt re-payment is another way to increase your income.
Create an emergency fund
Emergencies such as illness, job loss, expensive home or car repairs can happen anytime and when that time comes, you want to make sure you have enough liquid cash to navigate through it. If you do not have an emergency fund, chances are high that you will turn to credit. This could spiral into financial difficulties down the road.
Adequate insurance coverage
Having an adequate insurance coverage is very important as the future is always unpredictable. Accidents happen, work injuries occur, and natural disaster can easily cause thousands of rupees of damage to your home. To prevent any of these circumstances, ensure that you have enough insurance for your home and the lifestyle you lead.
Financial freedom does not necessarily mean retirement. It is being able to work at your pace, doing things that you enjoy and living where you and your family are happiest. One can achieve the same by following the above steps.
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Information provided on this newsletter has been independently obtained from sources believed to be reliable. However, such information may include inaccuracies, errors or omissions. and its affiliates, information providers or content providers, shall have no liability to you or third parties for the accuracy, completeness, timeliness or correct sequencing of information available on this newsletter, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information. , its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this newsletter.