Dear Paulami Das, As u said u r Airhostess in Jet, I assume ur age between 20-30 & possibly u r unmarried also. I also assume that all the salary components r taxable. So here is the Tax calculation for u first & then the instruments available for u to save tax.

A. Gross Taxable annual Income = 30000*12 = 360000
B. Zero Taxable income for women tax payer in current FY (2008-2009) = 180000
C. Tax payable in 10% slab = (300000-180000)*10% = 120000*.10 = 12000
D. Tax payable in 20% slab = (360000-300000)*20% = 60000*.20 = 12000
E. Total tax payable = C + D = 24000
F. Edu. cess & higher cess @ 3% of E = 24000*.03 = 720
G. Net Tax payable = E+F = 24720 Rs.

From ur income of 360000 Rs. if u invest 1L rs. in following Tax saving instruments, ur tax liability `ll come down from 24720 to 8240 Rs.

1. Employer PF (its already there in ur salary most probably)
2. PPF
3. NSC
4. ELSS (Tax saving MFs)
5. Life Ins. Policies
6. Pension Plans of Life Ins. cos. & MFs
7. Tax saver Bank FDs
etc.

U may also save more tax against ur mediclaim policy prem. of 15K max. for urself
& for ur parents also u may get more benefit for next 15K (20K in case one of ur parent is a Sr. citizen) so total 30K or 35K.

Thanks

Ashal...

Dear joshuapaulsingh, Here is first the calculation.

A. Amount invested = 8500
B. Time remain invested = 10 years
C. Maturity amount = 20000
D. compounded annual interest rate for the mat. amt. of C above = 8.94%

Plz. note these Nabard bonds r zero coupon bonds, hence the maturity amount of 20K `ll be available for Indexation for computing of Tax liability. Although no clear predictions can be made for future indexation but if we imagine @ 5% annual indexation or gross 50% indexation after these 10 years,
A. The Indexed cost of purchase of this bond after 10 years = 8500*1.5 = 12750
B. Maturity amt. = 20000
C. As the bond `ll be held for 10 years, the gain `ll also be Long term capital gains = B - A = 7250
D. Tax on C = 20.6% (including edu. cess @ 3%) of C = 7250*.206 = 1494 Rs.
E. After Tax pmt., Net gain = B - D = 20000-1494 = 18506
F. Hence Net Interest rate = 8.1%

Remember this is an indicative return only & actual return may vary due to change of LTCG Tax as per the indexed purchase price.

If u r satisfied with this rate of interest, u may invest.
If u can take some risk, u may also invest in some large caps MFs or balanced funds.

Thanks

Ashal...

Dear Ishwar Kumar, had u posted more details about ur income, ur age profile, ur risk tolerance level, a better answer could be prepared. Any way as per the little info provided by U, it seems in current year ur taxable income is 260000 Rs. (as u r telling a tax liability of 11000 Rs.).

A. Total Taxable income = 260000
B. Zero Tax income = 150000 (here i assume u r below 65 age)
C. Taxable income = A-B = 110000
D. Tax on C = 10% of C = 11000
E. Edu. cess on D = 3% of D = 330
F. Total Tax to be paid = 11330 Rs.

To save this tax liability, u may invest in following instruments as per ur comfort level upto 1L in Sec. 80C.
1. Employer PF (in all probability, it`s already there in ur salary)
2. PPF
3. Life Ins. Policies for self, spouse, children
4. Tax saver MF (ELSS)
5. NSC
6. Pension Plans of Ins. Cos. & MFs
7. Tax saver Bank FDs
8. Home Loan Principal Repmt.
9. Tuition fee pmt. to max. 2 children for a full time study in school or college or in prof. course.

For remaining 10K income u may take mediclaim policy for u & ur family members of this 10K prem.

Plz. note for ur specific query to ELSS (Tax saver MFs), there r several schemes out there, u may invest a minimum 500 Rs. & max. any amount of ur choice (Tax saving is limited to the limit of 1L Rs. of Sec. 80C). Some better performing funds r -

DWS Tax saver, Sund. Tax saver, Principal Tax saver, SBI Mag. Tax Gain

Thanks

Ashal...

Dear boysi, if don`t need money u have 2 options as the lock-in period is over.

1. Hold the investment in Rel. Tax saver.
2. Redeem from the Rel. Tax saver & invest the amount in a better performing large cap diversified fund like HDFC Top 200 or DSPBR Top 100.

Make a personal call for urself.

Thanks

Ashal ...

Dear Honeystock, Yes i know, we can`t eat that plastic.

On a serious note, I love that frugality with which our parents & grand parents lived their life. They sacrifice all their comforts of their present to make our future full with all comfort.

A more than 30% domestic saving rate is the testimony of this frugality & in my personal view, living a simple life with clear goals is a sure shot way of success & wealth creation over the long term.

Thanks

Ashal...

Dear Honeystock, I`m 100% agree with U Money is not everything. After all there r Master & Visa.

Ha Ha Ha Ha.

Thanks

Ashal...

Dear RN, Right now I`m living in Ahmedabad - Gujarat & all the shopkeepers & mall owners r waiting for their annual incentive time. Puzzled??.

Let me clear u, after the Diwali, the NRIs & specially NRGs (Non Resident Gujaratis) `ll come in droves to Gujarat for their annual vacation as well as for wedding of their Kids & these NRIs/NRGs `ll spend lavishly on every thing as u rightly pointed out that from there $ saving converted into INR, they `ll be the KING. Yes they r KINGs.

Thanks

Ashal...

Hi Ashalanshu, Very mature and intelligent comments from you. I am not advising against SIP because the markets are down. Markets will go up and down - that is their nature. However, SIPs are sold on the wrong basis. SIPs don`t mean lowering your cost averaging - it doesn`t work that way except on paper. If you have the patience read MMB boarder Callahan`s post on SIP in his blog: samsdungeon.blogspot. com BTW, I know Callahan just the way i know you, only virtually. My point with SIP is SIP is good if a person`s goal is to forcefully save money. But if the goal is to average down. Don`t Do It. I repeat just for emphasis `Don`t Average Down.` You are a smart person, look at the heading of this thread `Learn to invest in equities without an iota of risk` - can there really be a free meal? can someone really invest in equities without risk? More we run away from risk the more we court it. The very action of averaging down will drag one`s networth lower and lower. If I buy at 21k, then at 19k, then at 18k then at 17k - Now, i think 16k is absolute bottom. Markets can`t go lower than this i think. Whoosh markets go lower. By the time it is 12.5k i have invested all my money i now no more have any money to average down. Regards, Dragon....

my friend i started my career with just 200 Rupees in hand and started with a monthly salary of Rs 300/== to end till i earned nearly 2,50,000/= p/m as my last pay drawn. 33 years later....

when master limit gets over do you transfer to visa or viceversa..reason for the current turmoil in USA. still you can`t eat that plastic....

Ashal, By converting his dollar saving to INR i am wondering how rich an NRI would be if he decided to settle down in India. Dont u think its better to wait for that 5 years to get the networth of 1 Crore without tension than investing it based on Sensex CAGR????...

Dear Ashal My funds are 1. HDFC top 200 2. Pru ICICI Infra 3 Reliance Growth 4 DSPBR Top 100 5 HDFC Prudence 6 Magnum COntra I am doing equal SIP amounts on all 4 dates of the month for each of the funds (Except magnum contra which offers 3 dates in a month) thanks -mayekar ...

Hi ashalanshu, quote `Dear rags123, did u have any idea in december, that market is going to tank in jan & onwards `ll go down & down. ` unquote by the same logic, do you know when the market will go back to 21k or if it will go back. Don`t get angry with me - think about it. Maybe I am wrong. I wish that market goes up. The logic of SIP is very very similar to that wish. (what if one keeps averaging down and one fine day you realise you need half the amount invested urgently!) Wishing you lots of money, Regards, Dragon....

Dear Ashal, Pcspune , Ranjan, and other seniors I am doing SIP for past 2 years in select equity div funds. What if i plan to increase the SIP amt in same 6 funds by 1.5 times than what i had since past 2 years . ( i am having cash avaiable ) No doubt stock prices have fallen to 2007/2006 levels . If i increase investments in SIP in same funds for next 2 years , will i not be averaging better. Of course 2 years is assumed period of time market may take to recover( assuming worse case scenario) If may take lesser time in which case i would be happy to stop EXTRA sip and continue old amounts OR is it better to invest lumpsum whenver markets comes close to bottom( noone can predict bottom but somewhre close) whihc is a better strategy please advice thanks -RS ...