There’s no denying the fact that all of us have a legal obligation to pay our taxes. But that doesn’t mean filing taxes is everyone’s favorite task of the year.
Here is a list of the top few investments plans you can opt to save tax.
Long term Investments are better than keeping cash in the bank
The federal government looks favorably on the people who look to use their wealth for investments. It doesn’t matter whether you’re investing in bonds, stocks, or real estate. The government gives exclusive tax concessions to people who keep their cash flowing. And the longer you hold onto your assets the lesser taxes you have to pay.
It’s best to seek sound financial advice from experts when making investments, because investments should not be considered as an expenditure, rather a way to save up for the future.
Life Insurance
Millennials have not been very enthusiastic about life insurance. It seems like an age-old concept used by our parents and grandparents to plan savings and doesn’t seem to fit modern concepts. But life insurance, if done correctly can save you from having to splurge cash on heavy costs that can suddenly arise.
Many people are discouraged by the concept that you have to pay the insurance company a certain amount, or as it is called by the insurance company ‘a premium’ when everything seems to be going well and there are no situations in the nearby future that may need immediate costs. But calamities do not come with warning signs.
A life insurance makes sure that if a situation arises that you and your loved ones are in trouble or are left behind by the bread-winner’s unfortunate demise, they are covered by financial security. Medical emergencies or natural disasters are some of the leading causes that people need protection from.
As well as that, your taxable income will be taxed if it sits in the bank doing nothing. Reducing your taxable income by putting the same amount into an organization that guarantees you protection in return seems like the wisest choice you can make.
Invest in Bonds
Governments and national banks offer bonds as a means for money protection for people. This is an excellent way to reduce your taxable income while still keeping the amount cut off.
The money that you use to buy a bond will remain safely with the state or the bank until a certain time passes. You can then cash into the bonds and get your money back, no questions asked.
All investments made on bonds are not taxed by the government, since they are essentially one way the government can get back public money, they don’t need to tax it. It’s a win-win situation for everyone.
You may also choose to buy prize bonds which are another way to save up on taxes. Prize bonds come with the added bonus of giving you the option of winning a much larger sum than that you actually bought the bond for. In case you don’t win you still get back the amount you paid for the bond.