Five mistakes you must avoid while investing to save income tax
1.Ignoring your specific needs and requirements: This is one of the most common mistakes that many people make. Before making any investment decision, you must make a list of your specific needs and requirements so that the right kind of matched decisions can be taken. Therefore, it is important to not follow what the others are doing but to take care of your own financial aspirations.
2.Not choosing the right amount of investment: Underinvestment and overinvestment are both factors that you must avoid. The amount that you to choose to invest obviously depends on the earnest monthly income. Therefore, if you choose to invest in a particular instrument, you must do so after taking due care of meeting your needs and that of your loved ones. After doing that, the surplus amount must then be invested. However, investing the surplus completely must be avoided because you have to contribute towards the basic savings corpus as well as keep emergency funds available.
3.Not exploring all options: Sections 80C, 80G, 80D and 80CCD are various sections that offer exemptions on options that range from investments in health insurance to contributions towards certain charitable or other institutions. Therefore, you must have a clear understanding of the legal Sections under which exemptions are being offered so that you can have a better grasp of the available options.
4.Lop-sided investment portfolio: The ideal investment portfolio must consist of both the debt and equity instruments and even hybrid instruments. This ensures stable benefits over a period of time and ensures that all your funds are not tied up in a single investment option.
5.Not taking due care of present commitments: This means that if you have invested more than the surplus, then the present day commitments or immediate financial goals may not be duly met. Therefore, it is important that you take due care of present commitments while planning your long term investments.
HDFC Life offers several saving and investment plans that allow you to maintain security of the finances and offer market-linked returns and capital benefits. For details, click on the mentioned link: https://www.hdfclife.com/savings-plans .
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