Tax Saving Plan for any Financial Year Should Ideally Start at the starting of Financial Year and not at the last minute as most do.
Why , we should start early planning ? Say , you want to invest in ELSS and assume market was lower in Apr to June and you remember only in Jan Next Year, where Market was comparatively higher , that leaves no options other than to add ELSS at higher Prices ( Technically , if you could wait for 8 + years ,nothing Beats SIP in MF returns , still why miss adding at lower Prices ? )
The Top Options available under 80C are
1. ELSS Funds
2. Senior Citizens’ Saving Scheme
3. Public Provident Fund
4. National Pension Scheme
5. ULIPs ( Dont Go for them)
6. Pension Plans
7. Fixed Deposit
8. Life Insurance
9. Housing Loan
10. National Savings Certificate
We will see on ELSS today and others in the upcoming days
I use normal sips for investment( since 2010) and when ever there Is huge weekly or monthly fall in nifty , I add without any hesitation as I continue MF for 3+ decades and know the potential here .
How could a Person started ELSS or SIP at Nifty All time high of 11700 should act?
Keep adding Elss for every 500 points in Nifty at 11200, 10700, 10200 etc . This is applicable for Persons who have clear plan that they are not going to touch these funds for at least 8 + years and Market cycle in General consists of 8 years and by consistently averaging , our Net will be in decent Profit when Bull Cycle resumes .
ELSS have 3+ years lock in Period and the only Drawback they have is , say
you invested 5000 in Apr 2018 , 10000 in June 2018 ..etc , You will be eligible to Take them out as
amount of Apr 2018 only after Apr 2021 and amount of June 2018 in June 2021 .
Still I rate SIP in ELSS as the Best of the options in 80c (following which is Housing Loan) for the below reasons .
Spreading out the risk
ELSS being an equity-oriented fund, opting for one-time investment is like taking a risky bet in one go. You end up investing a huge chunk of money without being aware of the market conditions. Just in case you catch the market when it is at the peak, then such kind of approach can prove to be detrimental.
Instead, go for a planned and staggered approach by way of SIP. In this option, your investments are spread throughout the financial year. In this way, you lower the risk of entering the market at an unfavorable moment.
Discipline
By opting for SIP, you get into the mode of disciplined investing. You inculcate the habit of investing small sums at regular intervals. In this way, your investments become an integral part of your tax planning.
Instead of postponing investing till the last moment, you are able to invest in a planned manner throughout the year. It also helps to have
As money is invested at regular intervals you can take the advantage of market fluctuations. When the NAV is at low levels, you buy more units of the ELSS fund. Conversely, when prices are high, relatively lesser units will be bought at prevailing NAV.By investing at regular intervals, you can avoid the complex decision to time the market. Ultimately, per unit cost of your units is averaged which reduces the overall cost of investment.
Most importantly only in ELSS , we have good control as what we could do ( Add in Dips in Falls) against other Options where we simply watch !
If you are Failing to Plan , You are Planning to Fail is always a top Quote applicable in all areas and suits best in Finance .
Start Planning !!
