You sure are done with the taxation & returns for last year and most of you must have started executing your financial goals as planned for the year ahead. For all those, who are done with the annual financial plans and also those who are still wondering on where to invest and how to go about breaking your investment amount for the year ahead, here is a detailed explanation on the must have investments for the ongoing financial year.

Whether you are a working class corporate goer, a business person or managing a startup – these investments will surely help you plan better for the financial goals.

Public Provident Fund: The PPF scheme was launched to encourage savings across various income classes by Ministry of Finance in the year 1968. PPF is a long term debt instrument scheme which offers safety with attractive rate of interest. PPF falls under Exempt, Exempt, Exempt (EEE) and is one of the best tax saving instruments. The first E implies an exemption on the amount invested in the PPF, the second E implies an exemption on the interest on PPF and the third ‘E’ implies exemption on the total income earned from PPF. Following are key features of PPF scheme:

• Individuals in their own names as well as on behalf of the minors can open a PPF account in any of the banks. The HUF is not allowed to open a PPF account.
• Interest rates on PPF scheme are announced by Govt. of India annually. Interest earned is compounded annually. For current financial year of 2016-17 the interest rate is 8.1%
• Tenure of PPF scheme is 15 years and one can chose to continue in multiples of 5 years, with or without making additional investments to the PPF account.
• One can invest minimum Rs. 500/- to maximum Rs. 1,50,000/- in one financial year. The amount can be deposited in lump sum or in a maximum of 12 installments in a financial year.
• Loans and withdrawals are permitted depending upon the tenure of the account. The loans can be availed from 3 rd financial year and the interest on the loan amount is charged at 2% per annum above the PPF interest rate. Partial withdrawal can be made every year after 7 th financial year but the complete withdrawal is possible at the maturity.

Equity Linked Saving Scheme: The ELSS is a diversified equity mutual fund which invests 65% in equity related instrument with a lock in period of 3 years hence it qualifies for tax exemption under section 80C of the income tax act. ELSS funds are one of the best avenues to save tax as along with tax deduction, though not assured, the investor gets potentially higher returns. Following are key features of ELSS schemes:

• ELSS has the shortest lock in period of 3 years in comparison to other tax saving schemes.
• One can invest a minimum of Rs. 500/- in ELSS and there’s no upper limit on investment though maximum Rs. 1,50,000/- per annum are eligible for deduction under section 80C. One can invest in lump sum or in installments using systematic installment plan.
• Since these funds invest 65% in equity, there’s some element of risk with potentially high returns. Moderate to high risk investors can consider this option . The past performance is not a guarantee of the future.

Health Insurance: The medical costs are rising year on year and it’s not a secret that the inflation in medical care is much higher than the inflation in food and other articles. The inflation in medical care is in double digits and no decline in sight for years to come. Hence insurance companies has launched special insurance plans known as Health Insurance which covers the cost of an insured individual’s medical and surgical expenses. Depending upon the type of insurance coverage, either the insured pays costs out of his pocket at the time of medical care which is reimbursed later or the insurer makes payment to the hospital/medical care provider. One can claim tax benefits under section 80D for the health insurance premium paid for self and can claim tax benefits under Section 80DD for the health insurance premium paid for the health insurance of dependent/ disabled person. Following are advantages of Health Insurance Policy:

• Peace of mind
• Flexibility of choosing health insurance cover
• Cashless treatments available in the hospital. No need to carry cash.
• Tax benefits up to Rs. 30,000/- under Section 80D and Section 80DD
• Health Insurance available up to old age

Term Insurance: Term insurance policies are increasingly used as a financial planning and risk management tools these days as these are pure protection plans and most basic form of life insurance plans. These plans ensure your family’s financial independence in your absence. These plans offer high insurance cover with relatively low premium as there is no maturity benefit available (Don’t be disappointed at the end of the policy term, you are alive after all). The purpose of this insurance policy is to hold you until you can become self –insured by your assets. One can buy term insurance for a period of 5, 10, 15, 20, 25 years or till the age of 70 years. Also if you take a home loan from a bank then you must buy term insurance of the corresponding value. In case of your demise your family will not lose the home as the insurance company will repay the outstanding loan amount.

National Pension System: Pension Plans provide financial security and financial freedom in your old age without compromising on your standards of living. NPS was launched on 1 st January 2004 by Govt. of India with the objective of providing retirement income to all the citizens. Initially it was introduced for new Govt. employees but from 1 st May’09, the NPS has been extended to all the citizens (age from 18 to 60) of India including NRI’s. It’s a voluntary, defined contribution retirement saving scheme and the saving of the individuals are pooled in a pension fund and these funds are invested by Pension Fund Regulatory and Development Authority (PFRDA) regulated professional fund managers. To avail good pension you should start investing in NPS at an early age so that the power of compounding can make your corpus big and help you with decent pension.

We are sure, the concrete description above helped you in understanding about the financial instruments. To understand the utility or to subscribe to one of these, feel free to write to us on contact@sbsfin.com or you can also speak to our financial fitness expert.