Come new year, large portion of the emails/phone calls we get are from banks/financial institutions. They will have a common theme of “Saving taxes” for you at the last minute. And this is when maximum mis-selling of financial products happen as well. You enter into a ULIP which sucks money out of you (please read the article here to know in detail).
Why is so much of advertisement and selling happening at this time frame? The financial companies know very well that, most of us did not plan our investments or savings for the entire year – they very well know, we are behind saving taxes now and they can easily sell of new products. ULIP, Health insurance all sell like hot cakes during the time frame of January – March every year.
But what is wrong with this approach you might ask? Why can’t I plan for saving taxes in the last 3 months of the financial year?
The answer is simple – We Invest to achieve or goals, not just to save taxes. Our goals have got to be SMART (Specific, Measurable, Achievable, Relevant and Time bound). “I want to save taxes this year”, is just not a SMART goal. Saving taxes should be covered inside all your SMART life goals for ex: – 1) I want to get married and start a family in 3 years the cost of which would be 5L 2) I want to plan for my daughter’s graduation in another 14 years, the cost of which is now 10L INR.
In short – Saving taxes is not the end, it’s a means to the end.
