There are several investment options available for you to consider in 2023. From life cover insurance to pension plans, you can take your pick from multiple choices, depending on your future goals, basic requirements, tax savings, and other factors.
What Are Some Investment Options That You Can Consider In 2023?
Here is a closer look at some of these investment options and what they entail.
Investment Choices for 2023- A Brief Guide
If you are looking for an investment guide to 2023, then these are options that you can still
consider:
- Fixed Deposits- The regular FD or Fixed Deposit does not get you any tax benefits. You can only save taxes through investments in tax-saver FDs. They are tax deductible up to Rs. 1.5 lakh u/s 80C of the Income Tax Act. These FDs have 5-year lock-in periods, while the interest you earn will be taxable.
- PPF- The Public Provident Fund Scheme is another investment option worth considering. Investments in PPF are tax deductible under Section 80C till Rs. 1.5 lakh in every financial year. This long-term savings option requires you to open a PPF account at a post office or public/private sector bank. PPF contributions earn a guaranteed interest rate that the Government fixes.
- ULIP- Unit-linked insurance plans or ULIPs are great options to get both life cover and wealth creation opportunities through investments. The premium is invested in market-linked instruments and funds after deducting applicable charges. A sum assured is paid to the policyholder's nominee in case of an unfortunate demise in the policy period. Investors can choose their funds and periodically switch the same to safeguard or maximize their returns. There are tax savings on the premium payments up to Rs. 1.5 lakh per year under Section 80C.
- National Savings Certificate (NSC) – NSC encourages investors to save taxes as per Section 80C. Any post office or bank savings account allows you to purchase NSC certificates through the internet banking route. They may be bought in one's own name or for a minor. They can be purchased in a joint account with another adult.
- SCSS- This stands for the Senior Citizen Savings Scheme. The Government sponsors this for those above 60 years of age. This works based on a principal amount deposited in an SCSS account. This has eligibility for tax deductions up to Rs. 1.5 lakh under Section 80C. The interest is taxable based on the taxpayer's applicable slab.
- Life Cover Insurance- Life insurance is a great way to invest in your family's financial security for the future, should anything untoward happen to you. It will ensure that your family can maintain its standard of living, repay liabilities, and meet future goals even in your absence. It is thus a necessity for every portfolio. There are various life insurance policies, including ULIPs, endowment plans, and traditional policies. Premium payments for life insurance are tax deductible u/s 80C of the Income Tax Act, up to Rs. 1.5 lakh.
- Pension Plans- They represent another kind of life cover. These plans are slightly different from protection plans, i.e. those which aim at safeguarding the financial future of an individual's family in case of an unfortunate demise in the policy tenure. These plans enable an individual to provide financially for the family throughout the sunset years of life. Contributions made to these plans are tax deductible under Section 80CCC. The same limit of Rs. 1.5 lakh applies for these plans
- Health Insurance- Health insurance, while being a basic necessity for any individual or family, also gets you tax benefits. You can get tax benefits under Section 80 (80D). Those less than 60 years of age can get up to Rs. 25,000 in tax deductions under Section 80D, while this goes up to Rs. 50,000 for senior citizens. The maximum deduction under this section, subject to terms and conditions, can be up to Rs. 1,00,000.
- NPS- The New Pension Scheme is managed and supervised by the PFRDA. Anyone between 18-60 years can participate in the same, with lower charges for fund management. The money is managed across corporate bonds, equity, and Government securities. Investors can passively/actively manage their portfolios. NPS contributions have coverage under Section 80CCD of the Income Tax Act, with the maximum deduction being Rs. 1.5 lakh.
- Tax-Saver Mutual Funds- These are mutual funds which are also called ELSS (equity- linked savings scheme) at times. They invest in stock markets and are tailored for those with higher risk tolerance. Investments have lock-in periods of three years. Investments are tax deductible up to Rs. 1.5 lakh under Section 80C.
These are the top investment options you can consider in 2023 for maximizing your tax benefits
and earning good returns for the long haul. Life and health insurance are basic additions to the
portfolio that you should ensure first, followed by wealth-creation options like ULIPs.
You can then put some of your funds in the other avenues mentioned here. Remember that the cumulative deduction under Section 80C is Rs. 1,50,000. Hence, allocate your investments accordingly to get the entire amount deducted from your gross taxable income.