A lot of people are really confused now, because market is down and they do not want to invest everything in the equity market and with the new proposed tax, debt funds will attract the tax as per the tax slab. So the confusion is where to put their money. Not only debt, but the gold funds, the international funds whose Indian Equity percentage is less than 35% will attract the tax.
PC: Pixabay.com
So what all the options people have now:
There is no brainer to continue investing in the Equity market with your SIP. If you have some extra cash put that in equity too only if you do not that in another 10 years. Equity seems to be down but again it is not dusted. We will see the market will reach a new high when the inflation is in control as well the geo political tensions slows down. Till then happy investing in your equity.
I know I am not a great advocate of FD but with recent changes I would say that rather than putting money in debt, you should put in FD. Mainly because the interest is high now and you have to give the tax anyway.
If your saving for retirement, then put some money in PPF too, where you do notbhave to pay any tax. I know the PPF have a lockin period of 15 years. So if you are saving the money for a future date then PPF is the best option.
The FD gives you 7 percent interest and if you are in 30% tax bracket then the effective rate is much lower. That is 4.9%. Instead you can invest in HBD where you will get 20% interest and the effective interest rate would be only 13%. I have reduced one more percent because you have to pay 1% TDS too. Tell me where you can get 13% interest in fixed instruments.
Sovereign Gold Funds is another good funds where you can invest in Gold and get tax free returns. It also gives 2.5% interest every year. So you get double benefit and you do not have to pay any tax too.
