Which tax-saving instruments best for investment?

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Which tax-saving instruments best for investment?

There are many tax-saving instruments under section 80C, can you tell me out of these which investments offer the best return, also, will it be beneficial to invest in purchasing a house or should I invest in shares?

Profile photo of Prajakta Asked By: Prajakta 1 replies 1 helpful answers Last Updated: 6 months, 3 weeks ago
  • Profile photo of PrajaktaPrajakta
    Participant

    There are many tax-saving instruments under section 80C, can you tell me out of these which investments offer the best return, also, will it be beneficial to invest in purchasing a house or should I invest in shares?

  • Profile photo of Chetan ChandakChetan Chandak
    Moderator

    As rightly mentioned by you there are many instruments under 80C basket, each one having its on benefits. Which one to choose out of these options it matter of one’s age, risk appetite, and investment objective. If you are a risk  averse person EPF or PPF can be a good  option for you both providing good taxfree return. While PPF gives you 7.9% EPF carries an interest of 8.65%. For a young person who has the capacity of taking a bit risk ELSS can be better option as it has high potential of providing multi-fold returns as compared to any other tax saving investment option. But be careful before choosing ELSS fund and invest through SIP mode to  diversify your risk.

    Many people invest in house property just for gaining tax advantage but not necessarily everyone’s decision turns to be correct. One should not invest in house just to claim tax benefit. He should compare the net of tax cost of the housing loan and in the expected property appreciation rate is more than such cost then only it makes sense in investing in house.

    Investing in share (directly) carries a large amount of risk. You don’t have required expertise or knowledge of equity market you can loose badly in place of gaining. Therefore for a normal investor investing in MFs instead  of direct equity makes more sense.

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