Thursday, January 05, 2006

Invest wise, haste foolish

It's high time of the year to file income-tax returns. Especially, for the salaried class its impounding necessary to meet their investment commitment of Rs. 1,00,000 u/s 80C. This will allow them to enjoy tax-exemption in the first tax slab of Rs.0 to Rs.1,00,000.

Investors need to be careful while selecting from various investment options available. Amount should be wisely divided among LIC Insurance, ELSS, PPFs, MFs, etc. LIC is a safe bet but do not provide handsome returns. Depending on your income, minimum of Rs. 25000 can be allocated here. PPFs are not much attractive and would recommend, not to invest more than Rs.10,000. MFs provide handsome returns and can be looked forward to form a major part. Though, all the MFs may not provide consistent returns and a reliable investment agent can be consulted. One should not ignore the fact that equity MFs are subject to market risks.

ELSS also prove to be a good option covering tax-exemptions at the same time giving handsome returns. They carry a locking period of 3 years.

Here are some basic checks that investors can consider before making investments in ELSS :

1. Look out for the history of returns.

2. Company should be well-known and have a good operational record.

3. Shares in the portfolio should enjoy good sentiment in the Cash-market.

4. NAV movement during bad times.

5. Frequency of dividend payments.

So, go ahead, load your gear and wisely meet your commitments.

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