Don’t delay! Start 2025 With Tax-Saving Investments; Boost Your Financial Portfolio

If the life goal is retirement, then there are these new-age ULIP Pension Plans, which have emerged as an innovative tool for building a retirement corpus

We are almost at the end of 2024,which makes it a good time to reflect on the year gone by. This is especially so with regard to our choices - Did we do all we could to make our year a great one, while also ensuring that those decisions assure of a better future? This yardstick is as true for our financial decisions as it is for our personal ones.

The turn of any year is of course a time for celebration and time for taking new resolutions. It is also an important checkpoint to review our financial planning.

However, with so many investment options available in the market, it can sometimes be difficult to decide where and when to start and where to invest. So we have put together a step-by-step guide to help you make smart, end-of-year financial decisions.

Vivek Jain, head of investments, Policybazaar.com says, “One of the most significant factors for making investment decisions for most Indians is tax planning. Those missing out this windowmay end up paying a lot more in taxes than should be paying. The other factor is creating an adequate corpus to ensure that you are not dependent on anyone post-retirement. There are some prerequisites that you need to accommodate in your financial plans so that they do not derail even in an emergency situation.”

Term insurance:

This is rightly been deemed as the foundation of all financial planning. While you may have investments that offer returns, nothing beats the safety shield of a pure term plan. These plans are among the simplest but most impactful investments one can make. The size of the insurance cover term plans offer is significantly higher and comes at a very affordable premium. Of course, tax saving is yet another reason to go for it. These plans offer tax benefit of up to Rs. 150,000 for premiums paid under Section 80C. Even if you have other types of insurance plans that offer life cover, don’t forget to also opt for term insurance. You can add riders to these plans to further enhance the policy’s utility.

If you are looking for investments that involve no amount of risk, then guaranteed return plans stand out as a great option. These long-term plans provide fixed returns of up to seven per cent completely insulated from the fluctuations of the market. The great news is that many of these guaranteed return plans offer dual benefit of guaranteed returns along with the added shield of life insurance. So if the policyholder passes away during the policy term, the insurance component of the plan safeguards the family. They get a lump-sum payment to cover their expenses and achieve financial goals. So while you can build wealth systematically over time, your family is protected as well for any eventuality.

These plans also come with flexible tenure options with tenures as short as five years. Or you can lock in the rate of return for as long as 30 years.

The certainty of getting a fixed and high return over a period of 30 years can offer financial security that no other instrument can. The icing on the cake is that the returns under these plans are tax-free. Moreover, you can claim tax deductions on the premium that you pay under Section 80C, making them a prudent investment choice.

Unit Linked Insurance Plans:

If you are not for certainty and are willing to take more risks, then ULIPs, or Unit Linked Insurance Plans, are ideal for you. These plans also offer the dual benefit of insurance and investment. These plans too come with tax benefits. The main difference is that the returnsof these plans are market-linked. You can choose plans that invest in equities or debt. You may also choose balanced fund plans that offset some of the risk of the market with certainty of bonds.

If the life goal is retirement, then there are these new-age ULIP Pension Plans, which have emerged as an innovative tool for building a retirement corpus. These can be seen as a variant of ULIPs but designed specifically for retirement planning.

Like ULIPs, these plans invest in a mix of equity and debt funds and also give you flexibility to adjust your portfolio according to your risk appetite and financial goals. The main difference is that once you retire, you can withdraw up to 60 per cent of your corpus while the remaining 40 per cent is invested in an annuity. This gives you a regular income stream after your retirement.

Many ULIP pension plans come with a “Pension Booster” feature, which refunds key charges like administration fees. This significantly increases your returns. Moreover, these plans allow partial withdrawals after five years for emergencies, making them a versatile choice for long-term retirement planning.

Health insurance:

You may have covered your family’s future in case of your death, but what if you or your family goes through a medical emergency. With high cost of medical care, such an incident can also derail your financial goals. So it is must to have a health insurance plan to insulate your financial future from such eventualities. A comprehensive health cover protects you from rising medical costs. It also gives you peace of mind during emergencies.

Additionally, premiums paid on health insurance policies are also eligible for tax benefits under Section 80D. You can claim deductions of up to Rs. 75,000 if you’re also buying health insurance for your senior citizen parents.

The end of the year is not just a symbolic milestone but a practical deadline for making tax-saving investments and ensuring your financial portfolio is on track.

Waiting until the last minute often leads to rushed decisions, which may not align with your long-term goals.