Align investments with financial goals, liquidity needs, risk appetite

Last-minute choices made without considering needs could exact a high financial price

- SANJAY KUMAR SINGH & KARTHIK JEROME

If you are in the old tax regime and have not yet completed your tax-saving investments for the current financial year, you should act now. Barely a fortnight remains before the March 31 deadline. Last-minute decisions can lead to costly mistakes.

In the rush to complete tax-saving investments at the end of the financial year, many taxpayers choose instruments that do not match their long-term financial goals. “Instead of evaluating suitable investment options, they may end up purchasing low-return products, such as traditional life insurance policies, primarily for the purpose of claiming tax deductions,” says Rupali Singhania, founder, Areete Consultants. Products that are hard-sold get purchased at the last moment, without proper assessment of whether they are suited to the buyer’s financial goals, investment horizon, or risk appetite.

Many taxpayers also rush into buying tax-saving products without assessing whether they fall under the old or the new tax regime that year. “They sometimes make tax-saving investments that prove redundant because they end up choosing the new tax regime,” says Deepesh Raghaw, a Sebi-registered investment advisor.

Factor in existing investments

Before making fresh Section 80C investments, investors should first account for tax-saving investments and payments already made. “Employees already have provident fund contributions, which may be considerable in the case of those who have been working for some time, so only the balance amount may need to be invested,” says Arnav Pandya, founder, Moneyeduschool.