5 Tips to grow your wealth while saving taxes

One might be wondering every year how one ends up paying last-minute investments of tax every year and at the same time how to grow your wealth while saving taxes? One likely takes the planning of tax as an inevitable compliance task that aids one cut off the penalties, interest, and other stuff. There are ways with which you can now grow your wealth while saving taxes.

Tips to grow your wealth while saving taxes:

1. Enhancing the knowledge of taxation and personal finance

Unfortunately, we are not taught how to manage our money in our schools. Many times results are you end up giving taxes and other penalties. Lack of knowledge about managing your investments is why it becomes very essential why one should be aware of the ways to grow your wealth while saving taxes. Below given are the tips to grow your wealth while saving taxes:

• Having enhanced knowledge of growing your wealth
• Saving taxes and also spend some on researching about taxation and personal finance
• Always be updated on several tax changes and financials
• Helps you to save the expensive tax mistakes which result in heavy penalties

2. Unify planning of tax in your total financial planning

Usually, people presume tax planning as a different activity of compliance and never consider it as a part of our total financial planning. Therefore, at the end of the year, the amount needed to pay the tax is entirely separated from your total finance, which results in rash decisions, tax implications, premature withdrawals. To neglect this outcome you can follow the given tips:

• Firstly we need to fix our financial risks and goals profile
• At the time of choosing investment products never make the efficiency of tax the only thing. Never forget to cross-check risk, liquidity and lock-in
• For the financial product that is chosen, investment should be started systematically each month and in advance as well

3. Choosing the accurate avenues for the investment of tax to help with the creation of wealth in the long term process -

People often get stuck to the low return producing tax-saving way like NSC, LIC policies, PPF, etc. It is very essential to choose accurate avenues for investment of tax. Over time, there are nervous investments in these sectors of goals of creation to hurt wealth. The solution for this problem is to ponder upon the avenues of tax-saving that are stored in equity as:

• Equity has produced ways of returns that are more than various asset classes as hold upon long term debt
• Equity is also helpful in beating inflation
• There are various ways in which you can invest in equity. The better way in which you can invest is in schemes of equity-linked which is also referred to as ELSS
• One more way if anyone wants to invest is to invest in NPS. But investment Investing  in NPS has additional deduction above and over the 80C section limit

Additional Read: ELSS: Wealth Creation Analysis

4. Attach every investment to our financial goal

Never forget to tag along with the financial goal when you have done your tax investment. Now that one is clear which investment is more helpful and better, next time you want to withdraw the money you are well aware of the precaution needed to be taken. Tata Capital's Moneyfy is a digital platform that enables you to invest in mutual funds. It also provides you with products like Loans and Insurance. With the aid of Moneyfy, you are investment-ready, compare finds, invest by themes, make instant redemptions, and much more.

5. Analysis of tax investments timely

Usually, people first invest and then forgets. It is a kind of mentality of people that your purpose is done when the crucial tax deduction is done. But this conception is not at all correct because:

• Deterioration of the performance of the investment
• Change in your financial goal
• Change in tax results in the reduction in the efficiency of the investment from the perspective of a tax (best and latest instance is the change in the budget system of taxation for EPF and ULIP)

Additional Read: Financial Goals: The Importance of Setting Realistic Goals

Conclusion

By choosing accurate avenues for investment of tax and keeping other above-mentioned steps, you can easily grow wealth via tax-saving. However, do remember that it is imminent to calculate before investing so that you can make decisions wisely. Tata Capital's Moneyfy App is a digital platform where you can calculate your investments and make decisions accordingly. It provides you with features like Compare Funds, Mutual Fund Scanner, Goal-Based Investing, Invest by Themes, and so on, to make investing a convenient and hassle-free process.