Yes- Invest Zero- meaning nothing additional from your cashflow to make full use of your Rs 1.5L of Tax saving investments.
Its an interesting concept- applicable to both PPF as well as an Equity Linked Saving Scheme ( ELSS).
The ELSS is a scheme where one can invest towards the tax saving limit- but the funds are locked in for the next three years. At the end of three years from the time of investment, one can redeem the units tax free ( since equity investments for more than 1 year are tax free). If one has invested via a monthly SIP- then the withdrawal of the units also would need to monthly as the time of three years is met.
Now, very simply- one can withdraw the amount and re- invest into the ELSS again showing that a new investment has been made and hence no "additional" funds need to be utilized to obtain the tax benefits. The good thing is that there is no Entry load into these ELSS funds- which means - what comes out and fully go in!
This of course has a very significant impact on you cash flow which can then be utilized towards repayment of home loan EMI etc.
The similar strategy can be followed on PPF- though the rules are a bit different. One can only take out a % of the overall amount 3-4 yrs prior.
Please remember- the above example is a cash flow initiative- there is a significant downside to the savings angle when you keep taking out from your "investment " kitty.
Its a give and take and a useful strategy towards Cash Flow..
what you do with it - its your choice.
that's why this is simplefinancialsense.
Its an interesting concept- applicable to both PPF as well as an Equity Linked Saving Scheme ( ELSS).
The ELSS is a scheme where one can invest towards the tax saving limit- but the funds are locked in for the next three years. At the end of three years from the time of investment, one can redeem the units tax free ( since equity investments for more than 1 year are tax free). If one has invested via a monthly SIP- then the withdrawal of the units also would need to monthly as the time of three years is met.
Now, very simply- one can withdraw the amount and re- invest into the ELSS again showing that a new investment has been made and hence no "additional" funds need to be utilized to obtain the tax benefits. The good thing is that there is no Entry load into these ELSS funds- which means - what comes out and fully go in!
This of course has a very significant impact on you cash flow which can then be utilized towards repayment of home loan EMI etc.
The similar strategy can be followed on PPF- though the rules are a bit different. One can only take out a % of the overall amount 3-4 yrs prior.
Please remember- the above example is a cash flow initiative- there is a significant downside to the savings angle when you keep taking out from your "investment " kitty.
Its a give and take and a useful strategy towards Cash Flow..
what you do with it - its your choice.
that's why this is simplefinancialsense.
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