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Tax Saving Investments: Why Invest Early to Save Tax? - ABSLMF Blog

Why invest early to save tax?

Dec 18, 2018
10 mins | Views 1336

Do you delay your tax planning? We give you 4 strong reasons you should focus on tax planning and make your tax saving investments sooner.

No. 1 – Channelize your income

When you receive your appraisal at the start of the year, it is the right time to channel this extra income towards your saving plan. By investing early in tax saving mutual funds, you get to divert the extra amount towards additional deduction.

No. 2 – Rupee cost averaging

Investors investing in Equity Linked Savings Scheme (ELSS) can follow a disciplined approach by investing in ELSS funds through Systematic Investment Plans (SIPs) – of say Rs 5,000 each month. This makes you invest at some months when the prices are high and, in some months, when prices are low. This protects you as against investing in one go when the market is high but averaging the costs of your investments.

No. 3 – More time to possibly grow

Tax planning is essential, as you are more likely to make a mistake if you rush in at the last moment and loose on the right time to enter the market. By investing early, you not only give your money more time to grow but also have time to research before you invest. In case of doubt, you can very well consult your financial advisor before investing.

No. 4 – Lesser take-home pay

When you delay your investment, you mostly also miss out on the opportunity to claim it as a tax deduction and reduce your taxes. Start tax planning early as claiming refunds at the time of tax filing can be a time-consuming process.

So start planning your investment today and aim to save your taxes early.

Mutual fund investments are subject to market risks, read all scheme related documents carefully.

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