Are you the last-minute jumper? The extremist who waits till the last moment to compile a task. Then most probably you have waited for the whole march for this week to come and now you are ready to do the 80C investment ‘shubh-aarambh’.
We understand how delay can be purely unintentional and unplanned for. We got you covered with these choices from the 80C list, for you to make the best out of it.
BEWARE… DON’T RUSH!
The first and foremost advice at this moment is not to jump into things straight-away. Though this is indeed the very last chance to make any such investments, that does not mean you skip on to the bare minimum homework. Do not sign up for schemes that require you to pay for years and also do not have the provision of an early exit. If you happen to do that, a hefty amount will be charged.
Let us have a look at the possible options;
A. TAX-SAVING BANK DEPOSITS
Almost all of the scheduled banks have a provision for 80C qualifying tax-saving fixed deposit schemes. A 5-year lock-in period is mandatory for such schemes with a minimum deposit amounting to Rs. 10,000. Early withdrawal and loan facility is not available on such schemes. Also, the interest gained on these schemes is subject to TDS and taxable under the appropriate slab.
2018 onwards, there has been a drastic improvement in the rate of interest offered on these 5-year tax-saver FDs. Earlier, they used to be amongst one of the lowest paying instruments but 2018 onwards, small finance banks and some private banks have raised the bar and the tax-saving FDs are also quite rewarding.
In order to grab the best last-minute deal (I sound like a travel agent), you need to do a little homework. Look through newly established banks and small finance banks. For example, IDFC bank is offering a 7.75% rate of interest, Deutsche and Suryoday bank are offering a good 8.25% ROI on these tax-savers. Also, if you are a senior citizen, you may get an extra 0.50%. another feather in the cap is that these banks are also regulated by RBI and deposit insurance protects your money here too like other banks.
B. SENIOR CITIZENS SCHEME
The senior citizens saving scheme is a good option if you are a retiree and looking for the last-minute option under 80C. if you are 60 years and above, it allows you to deposit up to Rs. 15 lakh per annum in this scheme but only up to Rs. 1,50,000 is eligible for tax exemption under 80C.
C. EQUITY-LINKED SAVING SCHEMES
ELSS (Equity Linked Savings Scheme) is one offer all mutual fund companies or houses have at disposal. You can start with as low as Rs. 500 with no upper limit. The initial investment made under the ELFF folio is eligible for the 80C benefit. There is a 3-year lock-in period.
ELSS are open-ended funds so every day is a good day to start with. There are no guaranteed returns since they are market dependant funds. Hence the gains you will make will totally depend on when did you start and market situation at the moment.
ELSS has performed extremely well in the last 5 years but there is always a risk associated. The long-term investments, however, cancel out the risk factor. So, if you have the risk appetite and can hold your investment for the next 8-10 years, it will be extremely rewarding as compared to the short 1-3 years term.
D. MUTUAL FUND RETIREMENT PLANS
For people with lower risk appetite, there is an option offered by mutual funds called retirement savings funds. These funds are eligible for 80C benefits and exemptions. Your funds are channeled into a mixture of stocks and bonds which lead to an enormous corpus at the time of retirement. These funds hold good for a minimum of five years or until retirement whichever is earlier.
The following are some of the leading fund houses offering retirement funds:
3. ADITYA BIRLA SUN LIFE
4. FRANKLIN TEMPLETON
The plans offered are in a combination of debt-equity funds where the ratio may vary from 90:10, 65:35, 40:60, 15:85 and 10:90 where the former is equity and later debt.
The biggest benefit of investing in these funds is that they provide a great cushion over the market risks in both the long and short run. They keep on stabilizing their portfolio which gives an advantage of buying cheap and sell expensive.
Start Investing, Stay Invested!