Start investing in tax saving mutual funds, that is, ELSS funds which come with a three year lock in
I am 26 years old and unmarried. I am going to start working and will get Rs 30,000 in hand from April and Rs 1,600 will be deposited in PF each by me and my employer. I want to invest my money in such a way that I get tax benefit to the extent of my tax liability and I want some good return on my investment. Please suggest some funds. My parents are independent, no long term and short term goal as such; I might get married by 2018, not before that.
As you do not have any major responsibilities presently, you should try and invest approximately 15 per cent - 20 per cent of your monthly income once you start working. You have stated that you seek good returns on investments and prefer FDs or RDs. This is a bit of contradiction as you need to understand that to get good/ above average returns on investments, there should be an element of equity in your portfolio for the long term according to your risk profile and goals. Only FDs or RDs will not get you 'good returns' on investments.
Regarding your tax benefits under Section 80C, which have a limit of Rs 1,50,000, your mandatory annual EPF contribution will constitute a portion of it. I would then advice, that as you are young and have started earning, you should avail of an adequate life insurance cover through a pure term plan only. Though your parents are independent, once you get married this term plan cover will give your family adequate financial protection. The premium of this term plan insurance is also covered under Section 80C and will also give you tax benefits. For the balance amount, I suggest you start investing in tax saving mutual funds, that is, ELSS funds which come with a three year lock in. You can do a monthly SIP and stagger your investments through the year. These ELSS funds are also covered under Section 80C and help you invest for the long term in equity and also save tax. The (ELSS) tax saving fund I suggest is 'Reliance Tax Saver'.