As a starting point,
you may like to read my last post on tax saving options - http://mbaclassdiscussions.blogspot.in/2011/12/how-to-save-tax-under-section-80c.html
Not much has changed
since I last wrote this - except one thing - the finance minister, Mr Jaitley,
has increased the amount that you can invest under this section from Rs. 1.0
lac to Rs. 1.5 lacs per annum from this year.
Tax saver Mutual funds
are basically equity funds that have 60% plus exposure to equities. To avail of
tax benefit, you need to stay invested in the fund for three years and that is
where the catch is. In Mutual funds, I do not believe in committing to stay invested
in one fund for so long. With the markets being so dynamic, I believe in
keeping a check on MF’s every quarter and changing my portfolio if the
situation demands. For example, I had recommended FMCG, IT and Pharma funds
last year (http://mbaclassdiscussions.blogspot.in/2013/05/where-am-i-investing-now.html)–
but this year, post election, I have
recommended, that you exit these funds and invest in Large cap and mid cap
funds now (http://mbaclassdiscussions.blogspot.in/2014/04/where-to-invest-post-elections.html
).
Now I am open to changing
my stance of Tax saver funds with the basic assumption that the economy will
slowly but surely do well over the next 4 -5 years. Hence, I am recommending
the following tax saver funds - stay invested in them for three years and avail section 80C tax benefits
Both these funds have
done well in the past – have good fund managers and have a fairly large amount
of money invested by investors (AUM) and I believe these two funds will give
more than 15% returns annually for the next three years.
Also the earlier
you invest, the better for you. As currently the markets are in a wait and
watch mode, I would think you should invest now if possible. If you do not have
the liquidity, do not wait for Jan –Feb – March – invest in them as early as
possible.
The risks are quite
a few keeping a three year time frame – Syria, Ukraine, Ebola to name a few
that are currently visible. There may be many more in the quarters ahead. But
then I am an eternal optimist J
Disclosure - I have
invested in the HDFC fund for my tax planning for this year.
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