When it comes to reducing our tax outgo, we often select the first investment options that help us 'save' taxes. We tend to ignore the basic fact of whether they really fit into our overall financial plan. This may be because we do not devote much time, effort and thought to the tax planning exercise.
When it comes to investing for saving taxes, it is important to keep in mind that our investments are backed by a concrete plan and are chasing a fixed goal. In fact, all our investments, which are of tax planning nature or otherwise, must have a plan and must have a thought behind it.
More importantly, our tax system is designed in a way, which not only helps us save taxes but also helps us achieve our financial goals. Consider this, for securing our child's financial future, there are child plans; similarly, for our retirement planning, there are pension products. All these get us tax benefits. Hence it is important that we do not restrict ourselves to the amount eligible for saving taxes. We should go beyond and should actually be looking at what amount we will need in the future and not just how much tax we will save now.
Successful tax planning requires more than just selecting the tax-saving instruments. It also requires that our financial goals are met in the process. Hence it is very important to keep your focus on your financial goals and tax planning should be a part of your financial planning and not an end-goal in itself. By developing and implementing appropriate investment strategies, we can improve our prospects of saving taxes as well as meeting our financial goals.
In this article, we look at how proper tax planning can serve the twin objectives of saving taxes as well as helping you reach your financial goals.
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