Adopt smart ways to align tax planning to financial goals and benefit from best of both worlds
Two heads are better than one. Teams tend to perform better than individuals and by the same logic, by aligning your financial goals with the available tax saving options, you are likely to benefit the most. For most of us, income tax is the first exposure to financial decision making even before one can start writing down financial goals. Although both these aspects of our personal finances could be treated independently, you will be much better off by combining the two.
At 26, Mumbai-based Mohnish Panchal demonstrates the maturity of a veteran financial expert by matching his tax savings choice with his financial goals to make the most of the tax savings. “I am using the tax saving windows to meet my financial needs, which allows me to align the two effectively,” he says. The choice of financial instruments to save taxes is plenty, but to derive more than just tax savings you need to match their benefits with your financial goals.
Building a foundation
At the base of every financial plan rests the aspect of protection and risk mitigation. The two most important insurance policies that one should have are health insurance and life insurance, especially term plans. As premium payments towards life insurance qualify for tax deduction, one should first opt for adequate life insurance cover. The life insurance cover will take care of future financial needs of your dependents if you were not to wake up tomorrow.
This story is from the December 2016 edition of Outlook Money.
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This story is from the December 2016 edition of Outlook Money.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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