You got the extra dough, now all you need is some advice on what to do with it! The Style Symphony rummages through layers and layers of financial jargon and merges barely alive, yet sound enough to give you a crash course on taking Fantastico care of your cash with proper investment tactics.
Tax-saving investments? Tell me more!
There’s a whole bunch of them. Your salary slip shows a bit of your money ending up as Provident Fund. That counts as your first tax-saving investment. Then there’s PPF (Public Provident Fund). You can go to a post office, invest money in a PPF and the government won’t hold it against you. Next is an infrastructure bond. According to the government, our country needs money pumped into infrastructure. Do that and you walk away with a rebate. Also, investing in a life insurance policy or Mediclaim will do the trick too. Invest a lakh in any of these, and you will save the Rs. 20,500 tax you would’ve paid.
How can I save even more tax?
Over the Rs. 1.45 lakh that you save tax on, the government also lets you save tax on another lakh, if you invest your money in certain schemes. So if you’re earning 2.5 lakhs a year, you end up with Rs. 2.29 lakhs after the tax, and if you invest well, you might end up paying no tax at all.
What’s the life-insurance stuff?
Take a life insurance policy, and you enter a contract with an insurance company, where they agree to pay money when the contract reaches maturity (sort of like a climax) to you or to your heirs. The money you periodically pay them is called a ‘premium’. A ‘pure’ insurance policy is one where the premium buys protection in the event of death. Morbid yes, but at least it guarantees security for your family.
Let’s talk money-making investments!
Imagine you’re on the 14th floor of a building. You need to get to the ground floor. You got three options. One, take the stairs. It’s slow but chances of you breaking your neck is minimal. Then, there’s the lift; it’s faster but what are you going to do during a power-failure? Then, there’s a nice little option of jumping down. Better pray there’s something down there to break your fall.
That’s pretty much what investing is all about. Every investment is a function of risk and reward. The biggest risk? Losing all your money. Brrr….
How can I retire wealthy?
Looking at long term investment? Investing in equity markets is one idea. (You buy shares of a company and cross your fingers it doesn’t tank). Equity gives you two chances to profit. If the company makes a profit, you get dividends on your shares. So your capital stays intact and you can buy a round of drinks with the extra cash. Plus, if the company does really well, your share price also rises and if you sell, once again, you make a Fantastico profit.