Saving tax and creating wealth need not be separate goals

Many people start thinking about tax-saving investments in the last quarter of the financial year when they are nudged by their employers to submit tax proof. Their mental wiring becomes such that all they want is to dump money somewhere that gives them a tax benefit. And in a rush, most people fall prey to the next sales guy they meet. In this entire process, proper evaluation and suitability of the investment instrument takes a back seat. To ensure you save tax in the best possible manner, here are three things you should consider: #1 Tax planning should ideally start at the beginning of the financial year. For investors in India, April is the first month of a financial year. So, the earlier you start, the better it is. #2 Don't invest your hard-earned money in a tax-saving option blindfolded. Or just because someone recommended you. Understand all the possible tax-saving options and figure out which one suits you best. #3 Please remember that an ideal tax-saving investment must be a good investment first and a tax-saver later. Most people invest in Public Provident Fund (PPF), five-year bank fixed deposits (FD) and National Savings Certificate (NSC) because they provide guaranteed returns. But the flip side is that their re

This article was originally published on August 09, 2022, and last updated on November 18, 2022.