In today’s world, you’ve got to be smart to make your way up to your dreams, as hard work alone is not enough. The same applies to investments. Sure, you’ve got to be proactive in investing aggressively to accumulate enough wealth. But what you need even more is right planning to deal with unnecessary outflow of your hard-earned money.

One such outflow of money takes place at the time of making tax payments. Since taxes cannot be avoided altogether, as a smart investor, you should find ways to save your hard-earned money from going out of your hands. The best way to do so is to go for those investments which offer tax saving benefits among the range of other benefits provided by them.  

There are plenty of options that you have when it comes to putting your money in tax saving investments. From tax saving mutual funds to life insurance plans, you can make smart savings through the following instruments-

• Health Insurance Plans

A health insurance plan is the first instrument in which you can invest your money. This instrument will help you enjoy financial stability in case of a medical challenge by providing you the necessary support either through cashless hospitalization or through reimbursement. 

Concerning providing you tax-saving benefits, this plan will allow you to avail a tax deduction under section 80D of the Income Tax Act. If the policy is in your name or that of your dependent kids, spouse, or parents who are below the age of 60, then you will get a tax deduction of Rs. 25,000 in every budgetary year. However, the amount will increase to Rs.50,000 if the health insurance policy is for your parents who are above the age of 60 years. 

• Term Plan with Return of Premium Feature

When planning to save tax using investments, it is a wise idea to go for one that will offer your family security in your absence, along with giving you tax benefits. The term plan is covered under Sec 80C of the Act, which will provide you with tax benefits of up to Rs. 1.5 lakhs. Having this plan means that the insurer will provide your family with a sum assured upon your demise during the term period. Moreover, on purchasing a term plan with a return of premium option, you will even receive maturity benefit that will equal the total premiums paid by you, in case you survive the term. 

• Unit Linked Insurance Plan

Another excellent tax-saving plan to invest your money is a Unit Linked Insurance Plan. It offers twin benefits of securing your loved ones as well as helping you in achieving your goals. Also, it is covered under Section 80C of the Income Tax Act. Under the provisions, you can claim a deduction of up to Rs. 1.5 lakh annually on the premium paid, thereby saving a considerable portion of your hard-earned money.

If you have purchased the policy on or after April 1, 2012, you will also enjoy a 10% deduction on your sum assured. Moreover, if you are suffering from any ailment and disability, then this deduction will equal 15% of your sum assured, as mentioned under Section 80 DDB and 80U, respectively. Also, you will get tax exemption on the maturity amount and death benefit under Sec 10(10D).

• Public Provident Fund (PPF)

Investing your money in PPF is another way to earn significant returns while enjoying tax benefits. A savings instrument offered by the government, it can help you mobilize your savings, along with earn returns on the money saved. In this, you will receive returns in the form of interest, which is paid by the government. The PPF is covered under Sec80C of the Income-tax Act and offers a total deduction of up to Rs. 1.5 lakhs. 

It is a long-term instrument with a maturity period of 15 years that you can quickly start with a sum as low as Rs.100. So, this plan offers you a smart way to bring down your tax liability by way of deductions allowed under provisions of Sec 80C.

• Equity-linked Savings Scheme (ELSS)

Also known as tax saving mutual funds, you can also invest in ELSS when looking for a smart investment. This instrument invests your money in equity and equity-related securities and is covered under Sec 80C of the Income Tax Act. On investing your money in ELSS, you will enjoy tax deduction benefits up to Rs. 1.5 lakhs, thus, not just earning good returns on your equity investments but also saving reasonable sum of money through tax deductions.  

Invest Wisely, Save Smartly

If you want to use investments as a smart bridge to realize your goals and dreams, then you must go for smart tax-saving investments. Given your specific needs, you should build your portfolio by firstly considering purchasing instruments like insurance policies like health cover and term plan. After securing your family with such insurance covers, you can then look for investment options like tax saving mutual funds, PPF, ULIP, which offer high returns, along with tax-saving benefits.

To help you meet all your insurance and investment needs in the best manner, you can seek support from financial advisors like FinEdge. They will help you find the most suitable plans that align with your specific needs so that you can achieve all your goals while staying secure at the same time.