Six steps to help you avoid investment blunders

Formulate a plan

At the beginning of the financial year, chalk out how much you intend to invest in different asset classes.

Then spread out this amount across the next 10-12 months.

Choose correctly

Invest in a tax-saving option on the basis of your overall financial planning.

Choose an investment only if it helps you meet a certain financial goal (retirement, child’s education, insurance cover).

Automate your investments

Set up an ECS mandate for your investments in ELSS, Ulips and other options.

This will ensure that even if you forget to invest every month, your bank will not.

Avoid long-term plans

Don’t buy insurance products in a hurry. These are long-term products and one needs time to assess and compare the features.

Do not commit yourself to multi-year payments.

Know your deductions

Take into account deductions such as tuition fees of children and home loan repayment while calculating how much you need to save under Section 80C.

Many taxpayers don’t even know how much they have contributed to the Provident Fund during the year.

Avoid health cover only to save tax

Everybody needs health insurance. That’s why the government gives you a deduction for the premium.

Don’t see this as a tax-saving idea.

Buy a plan only after careful consideration of its features and clauses.