An open letter to those who invest at the 11th hour

Dear procrastinators,

When you invest the same amount on a tax-saving investment scheme, why not aim for the maximum returns and other benefits?

Stragglers miss out on so many benefits just because they were late. If you’re pondering over tax planning now, i.e. the last couple of months in this financial year, then please let this be your last year of late investments. Here is why.

It leads to hasty decisions:

You have less time to research and choose a plan most aligned to your investment profile, risk tolerance, return expectations and goals. Your choices become limited, and you end up going for low-risk and hence schemes that deliver low returns.

Tax-saving becomes your only focus:

11th-hour investments often go wrong as you overlook the wealth growth aspect of investments, focusing purely on tax-saving. The idea is to make the best tax saving plus smart wealth growth choices.

You lose the benefit of compounding:

Schemes like ELSS and PPF offer compound interest (you earn interest on investment as well as interest accrued every month). Investing at the beginning of a fiscal will help you reap maximum out of the magic of compounding.

Consider these investment avenues to save tax and grow wealth.

ELSS:

Equity Linked Savings Scheme delivers the dual benefit of potentially better returns as well as meet your tax-saving requirements. It comes with flexible investment modes of the one-time lump sum amount and Systematic Instalment Plan (SIP).

Small Savings:

PPF, National Savings Certificate and Sukanya Samriddhi Yojana (for those with girl children) are a few government-backed small savings schemes. They are low-risk and offer 7-9% annual returns with higher tax benefits.

NPS:

National Pension Scheme is a retirement plan offered by the government. In this, you can claim a deduction for an additional exemption of Rs. 50,000 over and above an 80C limit; this is as per the provisions under Section 80CCD. It is now completely free from taxation.

Remember, it is your hard-earned money, and your aim should be to get maximum returns as well as save maximum taxes. Here are a few schemes you might consider.