The proposal to tax long-term capital gains from equity funds has miffed investors. Their returns will now be lower. This could change the way people invest their savings. For instance, equity-linked savings schemes (ELSS) could lose the tax-free status that made them among the favoured options to save tax. Given that equity funds will not be allowed indexation benefit, the tax disparity between equity and debt schemes has narrowed, making debt funds and FMPs more attractive now.
The Public Provident Fund (PPF) and Ulips will continue to be tax-free while the gains from ELSS funds will be taxed at 10%. But experts say investors should not shun ELSS. Being pure equity-based instruments, ELSS can generate higher returns, making them ideal long-term investments, irrespective of the new tax. Getting You Rich, asserts, "ELSS remains lucrative as post-tax returns will be greater than PPF and high cost Ulips."
Low cost Ulips, sold online by insurance firms, can provide returns comparable with ELSS over the long term. But unlike Ulips, ELSS offer greater flexibility. Investors don't have to make a multi-year commitment and can shift to another fund if a scheme is underperforming. In a Ulip, the investor can only switch between funds offered by that Ulip. "ELSS funds have lost some of their sheen but they still remain the best option in the 80C basket for longterm wealth creation. Besides, ELSS still has the shortest lock-in period of three years among all instruments under 80C.
AVOID ULIPs, INSURANCE POLIIES
After theBugdet announced the tax on LTCG, insurance companies have started highlighting the tax-free returns from insurance policies and Ulips. However, financial planners advise against investing in these plans. "We recommend investment products that give taxable returns but perform better than products that are tax free but give low returns. Mutual funds remain our first choice. In any case, insurance and investments should not be combined in a product. A term plan serves the objective of protection and MFs generate higher returns.
If you want to save tax under Sec 80C, a combination of ELSS and PPF is perhaps the best option. While ELSS generate higher returns, PPF provide a stable foundation with assured income. "Ideally, investors should have a mix of ELSS and PPF. This fetches the investor three benefits under one basket-asset allocation afforded by mix of equity and debt, safety of a government-backed vehicle and pure growth of an equity offering.
To know more about investment options click on the following link:
https://weplanforfuture.blogspot.in/
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The Public Provident Fund (PPF) and Ulips will continue to be tax-free while the gains from ELSS funds will be taxed at 10%. But experts say investors should not shun ELSS. Being pure equity-based instruments, ELSS can generate higher returns, making them ideal long-term investments, irrespective of the new tax. Getting You Rich, asserts, "ELSS remains lucrative as post-tax returns will be greater than PPF and high cost Ulips."
Low cost Ulips, sold online by insurance firms, can provide returns comparable with ELSS over the long term. But unlike Ulips, ELSS offer greater flexibility. Investors don't have to make a multi-year commitment and can shift to another fund if a scheme is underperforming. In a Ulip, the investor can only switch between funds offered by that Ulip. "ELSS funds have lost some of their sheen but they still remain the best option in the 80C basket for longterm wealth creation. Besides, ELSS still has the shortest lock-in period of three years among all instruments under 80C.
AVOID ULIPs, INSURANCE POLIIES
After theBugdet announced the tax on LTCG, insurance companies have started highlighting the tax-free returns from insurance policies and Ulips. However, financial planners advise against investing in these plans. "We recommend investment products that give taxable returns but perform better than products that are tax free but give low returns. Mutual funds remain our first choice. In any case, insurance and investments should not be combined in a product. A term plan serves the objective of protection and MFs generate higher returns.
If you want to save tax under Sec 80C, a combination of ELSS and PPF is perhaps the best option. While ELSS generate higher returns, PPF provide a stable foundation with assured income. "Ideally, investors should have a mix of ELSS and PPF. This fetches the investor three benefits under one basket-asset allocation afforded by mix of equity and debt, safety of a government-backed vehicle and pure growth of an equity offering.
To know more about investment options click on the following link:
https://weplanforfuture.blogspot.in/
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