After having burnt fingers in the current financial crisis and market crash, it has become a little difficult for regular ELSS investors. Though the optimistic ones will continue to SIP in ELSS Tax Saving Funds, many of us would want to invest atleast some portion in safe tax saving investment options this year.
At this point of time there are two types of risks - risk of market falling further and doubts on sustainability of the AMC or the company you invest through. Therefore all the options have been listed keeping both the risks in mind.
SBI TAX Savings Scheme
5 years + FD with the safest bank in India. Rate of Interest might vary. Currently it is 9% p.a. for general public and 9.5% for senior citizens. 1% extra for SBI Staff and SBI Pensioners. Check current rates here
Deposits can be made in multiples of Rs. 1000. Minimum Lock in Period is 5 years.
NABARD Rural Bonds
NABARD is one of the apex financial institutions of India, fully owned by the RBI and Government of India. It is one of the strongest and safest financial institution to invest in.
NABARD Rural Bonds are 5 year lock in bonds with tax saving under section 80(c) of IT Act. It offers an interest rate of 8.5% p.a. for general public and 9.00% for senior citizens. For latest rates log on to Nabard.org
There are other options like National Savings Certificate (NSC) and PPF too. However they have a higher lock in and less returns. The only benefit offered by 15 year PPF is that the returns are also tax-free which is not the case with rest of the investment options mentioned above.
If you have an apetite for risk, you can put some money in ELSS (Tax Saving Mutual Funds).
Safe Tax Saving Investment Options
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2 comments:
1. Do not blindly invest money with the the first agent that you might come across. You might end up making mistakes. A lot of people end up buying insurance policies with minimal insurance coverage or putting money in instruments where they cannot access the money when they need it.
2. Do not make last minute decisions just because your payroll department has reminded you that the internal deadline for submitting proofs is approaching. Tax planning involves planning in advance to avoid the last minute scramble
Cant agree with you more Sushil. Yes, take your own time in choosing your Financial Advisor. You are entrusting your hard earned money with him. Do cross verify with his existing clients before committing your money.
Best of luck,
Srikanth
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