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Save Your Money By Investing

No doubt youre astonished at the amount you pay as taxes every year

. But you could significantly reduce that amount if you want to. If youre hoping to save money on taxes, then the best way to do it is to invest. While you could trod on the tried and tested method of investing in the Public Provident Fund (PFF) or the National Savings Certificate (NSC), you should also try to invest in mutual funds. You might be surprised, as you expect taxation on mutual funds - but you need to know where you can invest your money so that you can limit the amount of taxes you pay on it. The best way to go is Equity Linked Savings Schemes or ELSS. Theyre also rather popularly called tax saver mutual funds. Whats the big deal about it? Well, on the lock in period does exist it is considerably lower than for either the PFF or the NSC. The period is for three years, against the PFFs 15 years and the NSCs 6 years. There are different funds that you can choose from, ranging from those that give your growth or income; depending on what it is you want from the funds. The interest rates are better for ELSS when you compare it to either the NSC or the PFF.

When youre looking for a mutual fund to invest in, make sure you compare these factors with each other, so that you get an idea of what youre in for. The expense ratio is an important consideration. It shows how much of your money is going to expenses of the management before the rest goes towards investment. Needless to say, the expense ratio that is lower is better for you. The Sharpe ratio also needs an eye kept on it. This shows the level of fluctuations that the fund undergoes showing whether or not the decision making is sound. Sound decisions are likely to give a stable ratio; and less than sound decisions could make the ratio fluctuate madly. So a stable ratio is what youre looking for as far as the Sharpe ratio is concerned. Other than this, you can also choose from the large, mid and small cap investment opportunities. Generally, the large caps are preferred for the ELSS.

Mid-caps and small caps can be quite a risky venture, so if youre investing make sure you have sound knowledge of what youre doing. You need to know your documents well and ensure you do your research before you go ahead and put money in. Because once youve put your money in, youre stuck there for three years.

by: Angel
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Save Your Money By Investing