There is something empowering about deciding where your money goes. It is far better than spending money or worse, not having an idea on where your earnings are going. By making proper investments, you are giving your money a job – to make you wealthier over time.
While you are young, most of the times your account gets empty by the end of the month, and you tend to think that you are not earning enough. However, it is more about managing your income so that in the later years you have ample amount of savings. You will require these savings for your various future expenses. Moreover, if you can save tax by securing your future, that’s just a cherry on the cake.
In addition, investing your hard-earned money early helps in:
Avoiding Last Minute Rush
Procrastination is one of the most prominent diseases in life. Many people tend to invest towards the end of the financial year for gaining tax benefits. However, if you start investing early, you are saved from the mistakes that you might make while investing hastily. By investing small amounts in different tax saving instruments, you can avail various tax benefits offered under various Sections of the Income Tax Act. Early investments also allow you to take stock of your commitments and needs and save you from over-investing.
Picking the Right Scheme
Most of the times, you make investments to gain higher-returns in long-term. However, you have to make efforts in finding out the right plan for you. The portfolio composition, investment strategies and past performances of investment plans must be checked thoroughly before committing money in them. Early investments help you in finding out the plan that best suits your risk profile.
Many tax saving instruments also provide market volatility benefits. For instance, the rising crude oil prices and the falling prices of rupee are expected to drag the value of stocks down. This means it can be a great time to invest in equity funds. As you are young, you can take your chances on risky investments where returns are high. Moreover, the premiums that you will pay in these investments will gain you tax benefits as well.
The compounding benefits in tax saving investments make a difference in long-term. By continuously investing your earnings, you are increasing the returns on your investments exponentially. Good investors understand the benefits that come with early investments and never shy away from taking advantages of compounding.
Apart from helping with tax savings, early investments in different instruments can assist you in securing your and your families’ future. One of the most significant and secure instruments amongst these options is Term insurance.
Term insurance provides financial cover to your family after your demise. However, before purchasing a term plan, you need to find out the sum assured that will be enough to cover your family’s needs. You can easily do this by filling in specific variables in the term plan calculator and find out the appropriate amount you need to secure your family. A term plan calculator is user-friendly and a handy tool that helps in simplifying the complex data on different rates and amounts. In addition, you can easily avail tax benefits on the premiums paid for your term plan under Section(s):
Maximum tax deductions up to Rs. 1,50,000 can be claimed under section 80C. However, if your premium amount is not high, you can also club in other tax saving instruments with your term plan to gain the full deduction.
The death benefit received from your term plan is exempted from taxation under this Section.
Waiting for a suitable time for investing is the wrong strategy to follow. The earlier you start, the easier it is to build wealth. Early investments offer you great long-term benefits and returns. So, hurry up and start investing in different investment options and avail tax benefits as well.