5 Tax Saving Instruments for Your Investment Portfolio

5 Tax Saving Instruments for Your Investment Portfolio


An investment is a must to safeguard your future finances or save and accumulate money for the future. But it would have been better only if the returns from the investment were also tax-free. If you, too, were having the same thoughts, then hold your breath because there are investment plans that have a higher tax savings potential. Read on to know more about the top five tax-saving investments in detail.

Life Insurance

Life insurance will always remain the best tax-saving investment plan. The premium payment has tax exemption, the maturity amount in case of survival has tax exemption, and the sum assured to the nominee in case of demise is fully tax exempted. Apart from these, most life insurance also returns the invested capital, making them an excellent investment if the policyholder is alive at maturity.

This is why people these days don’t see life insurance as just a normal tool for protection against the risk of life. Life insurance can be the best investment policy with several direct and indirect returns that can provide assured returns to the investor. Through this, people invest money for their children, family member, elders, or even themselves as a retirement fund.

Provident Funds

Provident funds are among the best investment plans with the highest interest rates. The interest rates vary as per the authorities’ decision, but it is always in the range of 7% to 8%. Provident funds like EPF, PPF, and GPF are schemes through which salaried people can invest a portion of their monthly salary. The investment in provident funds can be voluntary or by the rules and regulations of employment.

The money accumulated in the provident fund account then attracts interest over time. The account holder can withdraw a portion of this amount, take a loan with this provident fund account as collateral, or get the funds at retirement. Several people invest in such schemes because they are from the government and directly under their supervision and regulation.

National Pension Scheme

National Pension Scheme is an investment plan which is open to all people based on some criteria. The investor must have a steady source of income to join this scheme as it requires a monthly deposit of a fixed amount. And when the investor reaches the age of 60, the scheme returns the investment with a decent interest rate of around 7%.

National Savings Certificate

National Savings Certificate is a one-time investment scheme through which a person can obtain an interest rate higher than most other banking schemes. A person can obtain a National Savings Certificate from any banking institution. They have to make a payment, and the certificate is valid for a term greater than a year. The investor can return the certificate at the term-end and get the investment back with an added interest rate of around 8%.

Fixed Deposits and Banking Instruments

Fixed deposits are also one-time investment schemes but require a bank account in the bank providing the scheme. Through this plan, an investor can get an interest on the investment after a duration of time. The more the length of the deposit, the more the interest rate will be. Currently, the interest rate for fixed deposits is around 7% and can change depending on the banker.

Investing in any of these tax-saving investments will provide you with a much higher return than expected. As money saved is money earned, the savings from the investment plans become an indirect earning from the plan and is a type of return. Invest in these plans if you wish to add the tax savings attribute to your investment portfolio. From all the discussed investment plans, life insurance is the only plan which guarantees the invested capital while providing assured mortality returns, tax-exempted premium, and tax-exempted maturity returns.

These qualities of life insurance make them the best investment plans to invest money in for the future. If you don’t have a life insurance policy, you are letting go of the opportunity to gain some of the best returns with the protection of dependents from any unexpected events.