Save Income Tax: 5 Long-Term Investment Ideas for Tax Benefits

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There are multiple ways to avail tax benefits officially through government schemes by investing your money safely and in the right ways. Here are a few schemes and commodities that you could invest in:

Mutual and Equity funds

Most of us are so occupied in our professional and social lives that although we manage to save money, we do not have the time to put it in the right place for it to multiply in the right ways. Just depositing our savings in a bank account keeps them stagnant. However, it is possible to earn money on your savings absolutely without any effort, by simply just investing it in the right mutual funds. Mutual funds, over a period of time, ensure they make the most of emerging trends in stock markets to double or even triple your savings. Invest your money for at least five years to allow the investment to give you substantial long-term gains.

To avail tax benefits, opt for tax-saving mutual funds, also referred to as ELSS or equity-linked saving scheme. These mutual funds are similar to regular equity funds apart from the fact that they include a three-year lock-in period. Redeeming mutual funds is deemed tax-free under Section 10(D). Motilal Oswal offers some of the best mutual funds to invest in India. One can even open a Demat account online without having to visit a branch.

PPF and EPF

Public Provident Fund or PPF offers an interest rate of 8.7% and is one of the best ways to invest your money. It includes tax benefits under section 80C. The interest that you earn on your PPF investments is completely exempted from tax. 

For those who invest in relatively risk-prone investment types such as SIPs or stocks, PPF is the perfect way to balance your investment risk capacity as it offers gradual but guaranteed returns. PPF is particularly relevant for people who wish to invest in low-risk schemes aimed at gains over the long term for retirement planning or other long-term financial goals. 

The interest rate on the PPF is market-linked and is revised annually. The PPF matures every 15 years. 

Stocks

Although they involve a certain level of risk and do not guarantee any fixed proportion of returns, investing in stocks, if done smartly and taking into consideration a certain level of risk, can be extremely profitable. Although safe investment opportunities guarantee you a fixed amount of returns, the percentage is relatively smaller. Investing in stocks can give you exponential returns, as the stock market is uncertain and the prices of stocks can shoot up overnight. 

Gold

Over the centuries, the value of gold has exponentially increased. The generations before us, as well as our ancestors, have all trusted gold to always be one of the safest and most reliable investments. The logic is simple- the yellow metal’s value will never drop. It will always increase. Either it will sky-rocket overnight, or if not steeply, it will increase gradually over the years. In every way, it is always a safe bet for long term investments. If you buy a substantial quantity of gold and keep, you will see that year down the line, its value will increase manifold. So, whenever you have good amounts of money saved, consider buying gold in the form of gold bars, gold biscuits, gold ETFs, gold mutual funds, or a gold deposit scheme. 

Real Estate

In recent years, with the developing economy and with urbanisation, the requirement of land for housing and building industries and factories is very high. With the increasing population, the construction of houses on empty land is also increasing. Naturally, with this rising demand for land, its prices are also rising. A house or a piece of land bought 5 years ago at a nominal rate, is today valued at almost 5 times its cost price. Thus, with commercialization, the value of the real estate is also rising, making it a brilliant investment idea. Although the investment to buy land may be high, the returns it will give in the long term will be even higher.

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