Six plans that will ensure best returns in 2018

Financial year 2017-18 is about to come to an end and now is the right time for you to begin tax planning for the coming financial year. It’s that time of year when you need to sit down and review all your term insurance, health insurance and other investment plans so that you can save on your income tax.

Investing in the right kind of plans can help you save income tax. Here are a few plans and policies which you should consider investing in this year to ensure you save tax next year.

1.      Life Insurance Plan: Life insurance plans are an investment everyone should make. It is the first step to your financial planning. It should be treated more as an investment than an insurance policy. When choosing life insurance one should opt for term insurance as it comes with low risk and high coverage. A life insurance premium is something you should add to your monthly saving plan.

2.  ELSS Tax Saving Mutual Fund: They offer the highest returns compared to any other tax saving investment plan in the country. The returns are not guaranteed but if you can afford to take some risk, your earnings can range between 12 – 15%. You can even opt for the dividend scheme and earn regular income from your investment.

3.      Health Insurance Plans: With the growing cost of healthcare in the country, there is really no other way to pay for medical expenses then to invest in health insurance. Even though this may not be an investment that gets you high returns, it is an essential investment that can save a lot of expenses. The Income Tax Act also has provisions to claim deductions on payments for your health plans. 

4.      Rajiv Gandhi Equity Saving Scheme: This scheme offers benefits for first time investors with income upto 12 lacs. The maximum investment allowed in this scheme is only Rs.50,000 this can be invested in stocks or mutual funds. This scheme gives you a tax exemption of upto Rs.25,000.

5.   Voluntary Provident Fund: This fund is the contribution of an employee to his provident fund, it is beyond the 12% EPF.  This fund carries the same rate of interest as the Employee Provident Fund. The current rate for EPF is 8.8% per annum. However, investment in VPF can only be withdrawn during retirement and not before.

6.  Unit Linked Investment Plan (ULIP): This plan provides life risk coverage. It can provide between 5-11% returns, but they are not guaranteed. The ULIP should be held for a minimum duration of 10-12 years to seen maximum returns.