17 Sep 2008

Tax and investments

Off late, i have been trying to understand all about different investment options, portfolios and how tax work? Many people do not have a sound knowledge of how tax works and how to save them. Blame it on its complex working and rules. Unlike US where taxes are given one time, in India there are several taxes that we pay. Tax on tax, tax on tax is what we have been witnessing.. However i am still dreaming of having a perfect and balanced investment portfolio that will help me settle down sometime in near future.. where someone will be taking care of my tax and investment worries and i just have to watch it grow... like a banyan tree spreading out its branches from a single seed. I do not wish to express my plans, however i wish to give some tips on taxes here to those who think tax as Greek.

Investment tips
1) Invest in diverse portfolios e.g. Mutual funds, investments, stocks, savings certificates etc
2) Invest regularly. Go for small amount at start but invest regularly for a longer period.. say investing 1000 per month for 10/15 years.
3) Go for annual payment of premiums as it will cost u lesser.
4) To support the annual payment, invest in recurring deposit for a year and at the same time.. enjoy the interests on it
5) Do not confuse Investments with Insurance.. though they seem similar, they are different instruments for different purpose. Investment helps you realize your monetary needs whereas insurance secure you from what you have secured in. eg Life, accidents, death, home etc
6) Do not confuse PRICE with VALUE.
7) Do not fall for something at the price of an instrument or the price it offers you at the end of maturity, think of what value it will be to you!!
8) If you can, invest larger amounts rather than letting it lie idle in your savings accounts.

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