I am a 24 years old salaried employee in IT sector. I want to invest some money (thinking of ₹1.5 lakh yearly) for tax savings as well as for long term gains. I am planning to invest ₹1 lakh in the PPF and ₹50,000 in MFs or other high-return funds with moderate risks. I came to know about HDFC Pro Growth Plus. Is it a good option? If not, please suggest some other options based on my requirement.
- Nishant Kumar
HDFC Life Pro Growth Plus is a unit linked insurance plan and not a mutual fund scheme. We do not recommend it as we believe it is always better to keep investments separate from insurance. You have age on your side and you can stay invested for a longer period of time. We assume there is a mandatory EPF contribution with your employer. Therefore to improve your long term returns, it would make sense to invest higher sums in equity investments rather than the PPF. But if you are risk averse then you can invest ₹1 lakh in PPF and the remaining ₹50,000 in one of the ELSS funds. ELSS funds are equity mutual funds for which initial investments are eligible for section 80C benefits under the Income Tax Act. Based on their track record, we think funds like Quantum Tax Savings, Axis Long Term Equity, ICICI Prudential Tax Plan or Franklin Taxshield fit the bill. Use the SIP route to make these investments so that you are not exposed to timing risks and get the benefit of rupee cost averaging. Tax planning should begin at the start of the financial year instead of being delayed to the last minute.
This article was originally published on February 16, 2015.
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