Once the merriment has died down, one of the most essential things that newlyweds may need to focus on is how they plan to handle their shared finances. A common understanding of money management can help a couple plan for their future in a smart and informed manner. If you and your partner are looking for some financial advice in this area, you’ll be glad to learn that parking your earnings in the right investment vehicles can equip you to tackle financial crises in a better manner.
However, with the availability of many different investment options for newlyweds, picking the right ones can become an uphill task. To help you handle this decision better, here are some of the best tax-saving investment options for newlyweds that you can consider putting your money in.
Life can be unpredictable and throw a curveball your way when you least expect it to. Therefore, the first thing that should be on the financial to-do list of every newly married couple is protection from untoward and unpredictable events. The best way to do this is by investing in a comprehensive life insurance plan. An insurance scheme can provide you with financial security by offering a protective life cover to your beneficiaries.
Well-structured insurance plans are great investment options for newlyweds, as they provide a life or health cover in addition to giving you a handsome return on investment. Furthermore, life and health insurance plans offer tax-saving benefits under section 80C of the Income Tax Act.
Public Provident Fund is one of the best long-term investment options for newlyweds. Not only does a PPF account fetch you high returns, but it’s also a very secure form of investment, as it’s backed by the government. A PPF account can be opened by any resident Indian individual, irrespective of whether they’re salaried or self-employed.
While a PPF account has a long lock-in period of 15 years, the amount invested and the interest earned on it are both tax-free. Under section 80C, your investment is deductible from your total income up to a maximum of Rs. 1.5 lakhs each financial year.
Parking your funds in real estate can help you secure your financial needs for the foreseeable future. By buying land or property, you acquire a long-term fixed asset that has the ability to provide attractive and stable returns. Furthermore, as the demand for real estate is generally high, it is also easy to sell your property and cash out in case you need to.
In addition to this, you can also avail several tax-saving benefits under the Income Tax Act with respect to real estate purchases. Section 24 allows you to claim the interest paid on your home loan as a deduction from your house property income. Additionally, section 80C allows you to deduct the principal paid on your home loan up to Rs. 1.5 lakhs.
Unit Linked Insurance Plans are the right investment options for newlyweds who have a high risk appetite. ULIPs are hybrid vehicles that combine the benefits of insurance and investment. The amount that you invest in a ULIP is split into two parts. One part of the amount goes towards providing you an insurance cover, while the other is invested in the financial markets.
As the returns are linked with the performance of the market, they generally tend to be much higher than the earnings obtained from most other investment options for newlyweds. ULIPs also provide tax-saving benefits under section 80C, as the premium can be claimed as a deduction up to Rs. 1.5 lakhs. Another advantage obtained by investing in ULIPs is the fact that both the investment and the maturity amount are tax-free.
The National Pension Scheme is another secure long-term investment option that allows you to plan for your retirement. Developed and managed by the Government of India, NPS ensures that you get a steady source of income after retirement by way of a pension. Upon retirement, you can withdraw up to 60% of the corpus, while 40% of it is retained to provide regular pension payments.
While you can enjoy a tax-saving benefit up to Rs. 1.5 lakhs in a financial year, there is no limit on the amount of contribution that you can make per year. Also, you can avail additional deductions up to Rs. 50,000 under section 80CCD (1B), thereby effectively raising your tax-saving benefit to Rs. 2 lakhs.
Canara HSBC Oriental Bank of Commerce offers many tax-saving investment options for newlyweds. If you’re interested in investing in ULIPs, the Invest 4G ULIP is an excellent choice. You can pick from any one of three benefit options, namely life option, life option with premium funding benefit, and a whole-of-life option. You can also enjoy different portfolio management options under this plan, including auto funds rebalancing, safety switch option, and systematic transfer option.
Alternatively, if you prefer to invest in a pure term plan, Canara HSBC Oriental Bank of Commerce life insurance has an appropriate investment option to fulfill your requirements. The iSelect Term Plan, with its many benefits, is exactly what you may need. It allows you to enjoy a pure life cover, flexible death benefit payout options, and inbuilt covers for terminal illness and accidental death or disability.
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