Cover Note. Here’s how you can chart your financial journey for FY24-25

Now that you have invested, saved and paid your taxes, let’s see how you start early for the next financial year.

It’s a good practice to invest the maximum in your Public Provident Fund (PPF) in one shot on the first bank working day of April.

Icing on the cake

This way, the investment earns interest for the entire year. It gives about the best returns among tax- saving instruments and compound interest is the icing on the cake.

But the real advantage in this is to peg the investment target date so that you are prepared ahead of time. If you are starting a new investment, say a life insurance policy, let the renewal be on your birthday or that of one of your family members.

Or on the wedding day. Hard to forget (for your own good!) and a clear date to plan for.

Going back to the previous instalment of CoverNote on how to cross over to the new regime, you have to start thinking of all such investments on their own merits.

Life insurance, health insurance, ELSS, tax-saving fixed deposits or the palette of small-savings schemes, each has its relative position in the returns matrix, and viewing them for what they are minus the tax saving is important.

One-time commitment

Remember to start considering them as one-time vs. repetitive commitments.

You can buy fresh national savings certificates for the next few years and stop and walk away if the tax-break is withdrawn. But if you commit now to a life policy with long-term premium payments, you will not get tax breaks when the system changes and this is a commitment you can’t abandon!

The life policy is valuable IF you have thought it through for what it offers.

Or, you could have bought a single premium policy. Or, maybe some other investment entirely. It’s like committing to a recurring deposit thinking it’s a fixed deposit.

Health insurance is also going to lose its tax benefits. It is costly today, and is getting costlier and the loss of the tax-break will be a difficult blow to take.

On the flip side, Section 80 also offers tax breaks on donations to specified charities. If 80G goes, please don’t withhold future donations. There are always those who need a helping hand and causes that need to be upheld.

In the reckoning of a life well lived, what you give away is what you truly keep in your credit.

(The writer is a business journalist specialising in insurance & corporate history)

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