Ensure your Choice of Instrument Matches your Needs
Tax payers tend to follow the recommendations of their agents blindly, which can prove disadvantageous later. If you are going for a life insurance policy, you should be aware about the fact that a persistent payment of premium has to done every year.
Always keep in mind that tax-saving affairs are not a one-time affair, so think before you go for it. You should be sure of paying off the premium payments over the long term, if you chose for investment-cum-insurance policies.
Be certain about when you need your invested money back. If you require it back in the period of 2-4 years, then go for short-term products. For example, ELSS mutual funds involve a 3-year lock-in, 5 year tax saver fixed deposit and national saving certificated (NSC). Moreover the account holders can borrow against the deposit after three year and allow partial withdrawal after seven year.
