If you are looking to make money and grow your wealth, then there are two primary strategies you can consider. You can either go with tax savings investments or pursue investments for high returns. There is no doubt that each strategy has its own merits and demerits, but it is important for you to understand the differences between them. Learning about these differences would help you make the right decisions for yourself.
So, without further ado, let’s explore and understand briefly about tax saving investments, investments for high returns, and more.
Tax Savings Investments
Tax savings investments are the kind of investments which help you in saving taxes. In other words, these investments help in reducing the amount of taxes you owe, thereby, allowing you to keep more of your hard-earned money. Some of the most popular tax saving investments under Section 80C of the Income Tax Act include Public Provident Fund (PPF), Employees’ Provident Fund (EPF), National Pension System (NPS), and tax-saving mutual funds (ELSS).
Also Read: What Are Some Tax-Smart Short-term Investment Plans?
Also, there are several investments which offer tax-free growth or tax-free withdrawals, such as the PPF and certain NPS schemes. However, you should always be aware of the fact that tax savings investments have limitations.
Investments for High Returns
Investing for high returns involves seeking opportunities that offer great growth potential. You could invest in equities, mutual funds, real estate, and P2P investing platforms to achieve your goals for high returns. Let’s discuss these investment avenues in detail.
The stock market has historically provided significant returns over the long term, though it comes with higher volatility. Mutual funds, on the other hand, offer you a diversified approach to stock market investing. This also has the potential to provide you with great returns in comparison to traditional tax-saving options.
Another great option for your investments to get higher returns is real estate. With this, you get the opportunity to enhance the value of your property and indulge in significant capital appreciation. Also, real estate can help you diversify your investment portfolio, which in turn, would protect you against inflation and market instability.
Also Read: Why Real Estate Investment Is Not Always a Good Choice?
Today, Peer-to-peer or P2P investing has gained popularity in India as an alternative investment option to get great returns. Through online P2P platforms, you can lend money directly to borrowers without any involvement of traditional financial banks. P2P investing offers potentially higher returns compared to conventional fixed-income options like fixed deposits or bonds. For instance, you can consider the 6-month investment plans or 3-month investment plans on the 13Karat app and earn returns of up to 13% per annum.
Conclusion
Choosing between tax savings investments and pursuing high returns requires careful consideration. Before you jump into putting your money into any investment opportunity, you should be aware of your financial goals and risk tolerance.
