Need Investment advice to save Tax 2010

S

sg3707

Adept
Hi Folks,

Again it is that time of the year where we need to start investing money to save tax.
Need good investment advice to save tax.

Previously I invested in SBI magnum Tax gain and ICICI prudential Pension Policy.
Now looking for new and better alternatives in ELSS.

These are the funds I found to be good.
ICICI Pru Discovery Fund (G)
HDFC Mid-Cap Opportunities (G)
Birla SL Dividend Yield (G)
HDFC Long Term Advantage (G)
Fidelity Equity Fund (G)
HDFC Equity Fund (G)
Principal Personal Tax Saver
Sundaram Tax saver

Are there any better options and which one would be better to invest for 3 years and more..for a long term perspective

Thanks in advance
 
Most of the funds you have mentioned are not eligible for investment under Section 80C

Only these funds qualify

HDFC LTA

Principal Personal Tax saver

Sundaram Tax saver
 
I have been saving on PPF. Max is 70k. Now need to invest in others.
This thread will help me too. Thanks OP for opening this thread.
TE'ians bring in your views.
 
PPF is the best decision for the following reasons:

-The PPF investment provides the lowest risk possible

-Tax rebate facility offered on money invested

-Flexibility of investment

-PPF account is exempt from wealth tax

-Provision for loans and withdrawals

-The amount in the PPF account cannot be attached by courts in case of bankruptcy or default on any loan payments
 
OK Went through this link to read about PPF

Lockin period is very long i.e 15 years and interest rate is 8%

The other advantages mentioned like loan etc..are currently not that important..

Also how is National Savings Certificate (NSC)..

Lock in period seems to be 6 years and the interest of 8% is compounded half yearly..

Public Provident Funds,PPF,Tax saving,Tax Savings Provident Fund A/c | Indian Postoffice Savings | Savingwala

Edit:

Found two calculators for the same

NSC Interest Calculator: http://www.investmentkit.com/government/nsc-calculator.shtml

PPF Interest Calculator: http://www.investmentkit.com/government/ppf-calculator.shtml
 
It is a proven fact that Equity has always outperformed fixed interest options worldwide over a 15 year period

You take any country & any 15 year period, you will find that equity has given a better rate of return over fixed rate of interest options

For people having more then 15 years horizon should invest only in good ELSS funds on regular basis preferably through SIP to even out the ups & downs to build up a corpus for their retirement.

Moreover in a country like India where we have a high rate of inflation, the real rate of return is negative for investment in PPF & NSC
 
sg3707 said:
Also how is National Savings Certificate (NSC)..
Lock in period seems to be 6 years and the interest of 8% is compounded half yearly..
Public Provident Funds,PPF,Tax saving,Tax Savings Provident Fund A/c | Indian Postoffice Savings | Savingwala
Click to expand...
I like NSC's, you can put upto a lakh per year in them.

The kicker is compared with the other options you mentioned. any NSC interest that's earned per year can be added to the 80C deduction, so you don't have to put a full lakh each year to avail of the full deduciton. After one year you put

1lakh - interest earned from NSC

and so on for the following years.

With the other instruments you cannot club the interest earned with the 80C, so you would have to invest a full 1lakh each year. Another point is you cannot take the money out for six years anyway, so less money invested is more for you to spend.

PS: Aren't you kind of late ? The deadline to file taxes was Dec 15 (!)
 
blr_p said:
I like NSC's, you can put upto a lakh per year in them.

The kicker is compared with the other options you mentioned. any NSC interest that's earned per year can be added to the 80C deduction, so you don't have to put a full lakh each year to avail of the full deduciton. After one year you put

1lakh - interest earned from NSC

and so on for the following years.

With the other instruments you cannot club the interest earned with the 80C, so you would have to invest a full 1lakh each year. Another point is you cannot take the money out for six years anyway, so less money invested is more for you to spend.

PS: Aren't you kind of late ? The deadline to file taxes was Dec 15 (!)
Click to expand...

You have forgotten to mention that the notional interest earned on the NSC every year is also added to your total income as other income & you are liable to pay tax on it from your pocket.

If you are in the higher tax bracket then your real rate of return is 5.5% only

Only interest earned in PPF is Tax free
 
shravank30 said:
You have forgotten to mention that the notional interest earned on the NSC every year is also added to your total income as other income & you are liable to pay tax on it from your pocket.
Click to expand...
If you can club the interest earned in the previous year from NSC into the next year's 80C, where is the question of paying any tax on it ?

It basically gets transferred from your taxable income into 80C, therefore there is no question of paying tax on NSC interest at all.

This is the reason to chose NSC over various bank tax saver FD's because the interest earned on those FD's DOES ADD to taxable income in the following years.

shravank30 said:
Only interest earned in PPF is Tax free
Click to expand...
PPF is a much longer term than NSC. 15 years !!

If you can lock away money for that long then equity as you said is a better option. What you've not mentioned in your previous post is what the rates of return are ? Better than fixed rates, maybe but by how much is the question.
 
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