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Breaking Investment Stereotypes The Millennial Way

We are the prized generation. Part of India’s burgeoning young, modern, urbane and cool millennials! Tradition is old school, Telegram is cooler than Whatsapp, Diesel is passé, Tinder is way cooler than OKCupid, and hackathons not marathons are our events to participate in, right? 

We’re proud of breaking most social conventions. And rightfully so too! After all, if our generation won’t breach establishment norms, who will? We are young professionals, working furiously and flexibly; health and fitness is no less important to us than wealth.

Complications Galore

Over the past decade we went to college, got a job, travelled, moved, switched jobs again and now we think we have it all figured out. We have a lot to look forward to - growing our careers, getting married, starting a family, paying off impulsive car loans, buying a home, trying to save what we can, and more.

In the last few years life has suddenly become a lot more complicated.

Sure, we’re making good money, but can’t decide if it’s better to save for a down payment or pay off my student loan. I want to plan an epic honeymoon, and also be prepared to send my kids –whenever they arrive – to the fancy Ivy League I missed going to. 

OMG, it just dawned on me that I have to do my own financial planning, not my parents or grandparents! 

YOLO- You Only Live Once!

Stop living paycheck-to-paycheck! Figure out how to cut costs, even by a few hundred rupees a month. A sure way to set financial goals and begin saving right away. Set a target to save at least three months’ of our salary within three years, if not earlier. 

ULIP is a great way to build a corpus of our investment. ULIPs offer a whole host of high, medium and low risk investment options under the same policy. One can choose an appropriate policy according to the risk taking appetite. ULIP policies also allow switching between fund options without any additional expense as many times as you wish.  

In all likelihood, we don’t have enough money saved yet to take care of your family if something happens. Term life insurance is inexpensive when we’re young. Mere  Rs 1,000 can multiply up to 12 times in 20 odd years. Remember, term life insurance is not just one product, it can have many variations. Always plan your investments accordingly. Term insurance should definitely be a part of our investment mix. 

Priceless Tip

Let’s also find a financial planner or a tax advisor, and learn how to save taxes. Investing money in many government approved schemes will reduce the tax liability to great extent. A tip I got from my dad still holds good: “Always keep the 50/30/20 rule in mind: 50% of your income towards necessities like your household expenses and taxes, 30% toward discretionary items like vacations and partying, and 20% toward savings. ”Having a larger pool of money to invest in something bigger when the time is right is invaluable.

If breaking conventions is our norm, we might as well break yet another – investing in insurance schemes is not all fuddy-duddy, buddy!

This content was provided by HDFC Life

All information provided "as is” for informational purposes only and investments involve risk of loss. Yahoo! is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein.

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Grow Your Savings Through Smart Tax Planning

Every year, as it nears December, most people put their minds on saving the “dreaded” income tax. As a law-abiding citizen, one must file an income tax return annually to determine the tax obligations. As many as 8.45 crore taxpayers have been registered as of March 2019. In fact, among all states, Maharashtra tops with the highest number of tax filers, followed by Gujarat, Uttar Pradesh, Tamil Nadu and West Bengal.

In most developed countries including US and other richer nations, the tax component of individuals are far higher. They also do not have as many advantages of tax deduction schemes as we have in India. Most countries, including India, employ a progressive tax system, in which higher-income earners pay a higher tax rate, in comparison to their low-income counterparts.

Here’s a look at the Income Tax slabs for the Assessment Year 2019-20:

Tax Deductions Allowed in India

i) Deductions on Investment

The government allows for certain deductions to save tax, at the end of every financial year. It is essential to keep yourself informed of all the deductions, rebates and concessions to pay the least amount of tax on your total income. Ideally, it is advised to start tax planning at the start of every financial year to gain maximum benefit.

In India, you can claim a tax deduction up to Rs 1.5 lakh of your total income under section 80C. These are the investments specified: Public Provident Fund, tax saving mutual funds, tax saving fixed deposit, National Savings Certificate, premium on life insurance policy, ULIP (Unit linked Plans)and Employees Provident Fund.

We also have Section 80CCC that provides a deduction for any amount paid or deposited towards receiving annuity from insurance.

Further, under Section 80AA, deduction is allowed with respect to any income that is earned by way of dividends from a domestic company (this is included in the gross total income of the assessee.

ii) Income Tax Deduction for Interest on Home Loan

The interest portion of the Equated Monthly Installments paid for the year can be claimed as a deduction from your total income up to a maximum of Rs 2 lakhs under Section 24. From Assessment Year 2018-19 onwards, the maximum deduction for interest paid on Self Occupied house property is Rs 2 lakhs.

iii) Tax deduction on Medical Insurance

In India, as an individual or Hindu Undivided Family, you can claim a deduction of Rs 25,000 under Section 80D for yourself, spouse and dependent children. There’s also an additional deduction for insurance of parents, up to Rs 25,000, if they are below 60 years of age. If they are above 60, the deduction amount is Rs 50,000.

For instance, a health insurance policy from HDFC Life can provide a range of tax benefits. The premium paid for a Health Insurance policy can be deducted from the total income under Section 80D of the Income Tax Act. The tax deduction under Section 80D is also allowed for making a payment to purchase or renew a Health Insurance policy on self, spouse, dependent parents or dependent children.

These are ways and means to maximize our tax benefits. But any such analysis would be incomplete without taking a look at Unit Linked Insurance Plans in India, one of our strongest options to save tax.

Unit-Linked Insurance Plans are fast becoming one of the most favoured instruments to save taxes. They have a minimum lock-in period of five years and make for an ideal investment avenue. ULIPs in India are affordable, offer diversified return options, and also multiple switches between available fund options. According to your risk appetite, choose a plan you think works best for you that will in turn offer you stable returns over a period. Besides the benefits of financial returns, one of the most attractive features of ULIPs is the tax benefits they offer, much to the advantage of the policy subscriber. HDFC Life Click 2 Wealth offers this and much more!

Paying your taxes sincerely and on time is your patriotic duty. Utilise these tax benefit schemes to save your money. Pay more attention to the act of tax planning. For any assistance, there’s always HDFC Life you can count on.

This content was produced in partnership with HDFC Life