It’s January. Your employer’s asking you to submit receipts for all those tax-saving investments you promised you’d make way back in April last. You know that if you don’t submit these receipts you’re going to have to pay additional income tax. For no reason, you don’t want to pay income tax. You look around and see everyone making a mad and frantic last-minute dash for ULIPs, ULPPs, ELSS, return-guaranteed products (the latest craze), and other exotically structured products guaranteed to make you poor. Everyone’s asking you: “Have you made this year’s savings?” Your mind plays tricks on you; you finally join this race, make a really lame investment, and then regret forever.
Here’s my advise:
- Think long-term; not short-term.
- It’s sensible to pay additional income tax this one year rather than being stuck with lame investments that require you to fork out large sums every year.
- Your investments should be planned and should match your goals; last-minute tax-saving investments don’t do either.
- Run away whenever you hear someone say “tax saving.”
What’s your experience been?
Tip Tuesdays is my initiative to share practical personal finance tips â€” every Tuesday. I’d be delighted if you could share a tip or two from your own experiences. Drop a comment or use this form to submit your tip. And, as always, do spread the word if you find this useful.