6 Rules From 6 Of The World's Top Investors

Investors don't agree on much, but they do agree that making money in the market comes with a steadfast strategy that is built around a set of rules. Think for a moment about your early days as an investor. If you're like many, you jumped in with very little knowledge of the markets. When you bought, you didn't even know what a spread was and you sold either too early if you saw a gain or too late if your stock dropped in value. If your only investing rule has been to not follow any rules, you're probably disappointed with your results so far.

If you don't have your own carefully crafted suite of  investing rules, now is the time to do it and the best place to start is to ask the people who have had success in their investing careers. We not only found people who can claim success, we found six of the most successful investors in history.

"Be patient with winning trades; be enormously impatient with losing trades. Remember it is quite possible to make large sums trading/investing if we are 'right' only 30% of the time, as long as our losses are small and our profits are large." – Dennis Gartman

Dennis Gartman began publishing The Gartman Letter in 1987. It is a daily commentary of global capital markets that is delivered to hedge funds, brokerage firms, mutual funds, and grain and trading firms around the world each morning. Mr. Gartman is also an accomplished trader and a frequent guest on financial networks.

His rule above addresses a wealth of mistakes that young investors make. First, let winning trades run. Don't sell at the first sign of profits. Second, don't let a losing trade get away. Investors who make money in the markets are OK with losing a little bit of money on a trade but they're not OK with losing a lot of money.

As Mr. Gartman points out, you don't have to be right a majority of the time. What is more important is to let a winning trade run and get out of a losing trade quickly. The money you make on the winning trades will far outpace the losing trades.

"It's Far Better to Buy a Wonderful Company at a Fair Price than a Fair Company at a Wonderful Price" – Warren Buffett

Warren Buffett is widely considered the most successful investor in history. Not only is he one of the richest men in the world but also has had the financial ear of numerous presidents and world leaders around the world. When Mr. Buffett talks, world markets move based on his words.

Mr. Buffett is also known as being a prolific teacher. His yearly letter to investors in his company, Berkshire Hathaway, is used in college finance classes in the largest and most prestigious universities.

Mr. Buffett gives two key pieces of advice to the investor: When evaluating a company, look at the quality of the company and the price. The quality of the company is most important and requires that you understand balance sheets, listen to conference calls and have confidence in the management. Only after you have confidence in the quality of the company should the price be evaluated. According to Mr. Buffett, if the quality of the company is high, don't expect to buy it at bargain bin prices. If the company isn't a quality company, don't buy it because the price is low. Bargain bin companies often produce bargain bin results. Sometimes good companies have bad stock and when you see that, dig deeper into your research. If the company still looks good, buy it. 

 "Do you really like a particular stock? Put 10% or so of your portfolio on it. Make the idea count. Good [investment] ideas should not be diversified away into meaningless oblivion." – Bill Gross

Bill Gross is the co-chief investing officer of PIMCO and manages the PIMCO Total Return Fund, one of the largest bond funds in the world.

Mr. Gross' rule speaks about portfolio management. A universal rule that most young investors know is diversification or not putting all of your investing capital into one name. Diversification is a good rule of thumb but it also diminishes your profits when one of your picks makes a big move while other names don't. Making money in the market is also about taking chances based on exhaustive research. Always keep some cash in your account for those opportunities that need a little more capital and don't be afraid to act when you believe that your research is pointing to a real winner.

"We're getting hurt, but I'm a long-term investor"- Prince Alwaleed Bin Talal

You may have never heard of Prince Alwaleed Bin Talal, but he's well known in the investing world. An investor from Saudi Arabia, he founded the Kingdom Holding Company. If anybody had reason to panic, it is him. Prior to the Great Recession, he owned a 14.9% stake in Citigroup at a price much higher than its post-recession price. In addition to that, his real estate investments in India lost considerable value after the 2009 recession.

When others may have sold, Prince Alwaleed Bin Talal has done what many of the best investors have done to amass their riches: Hold the stock for a long period of time, taking large market events out of the picture and collecting a dividend while they wait.

It's OK to trade stocks on a short or medium term basis, but the bulk of your portfolio should be invested in longer term holdings. 

"You learn in this business … If you want a friend, get a dog." – Carl Icahn

Carl Icahn is a private equity investor and modern day corporate raider, buying large stakes in companies and attempting to get voting rights to increase shareholder value. Some of his holdings have included Time Warner, Yahoo, Clorox and Blockbuster Video.

Mr. Icahn has made his fair share of enemies over the years, but investors shouldn't take his advice strictly in terms of interpersonal relationships. How many times in your investing past have you read an article, watched a news report or took a tip from a trusted friend about the next hot stock and lost money?

There is only one piece of advice to act upon: Your own exhaustive research based on facts (not opinions) obtained from trusted sources. Other advice can be considered and verified but it shouldn't be a sole reason to commit money.

"I am convinced that all this poverty in Mexico and in Latin America, like it's happening in China is the opportunity to grow. It's an opportunity for investment" –Carlos Slim

Another of the richest men in the world, Carlos Slim, owns hundreds of companies and has an employee base of more than 250,000. His quote above represents a mindset that the best investors possess. They don't look at what's happening now. By studying the momentum of a company or an entire economy and how it interacts with its competitors, great investors invest now for what will happen later. They are always forward thinking. If you're looking at now or trying to jump on the bandwagon of an investment that has already had short term gains, you've probably missed the big move. Try to find the next big winner but always anchor your portfolio with great companies that have a long track record of steady growth.

The Bottom Line

Now that you've read about one of each of these investors' rules, it's time to become a student of these investors and learn from their experiences. Each of these investors is known for being students of the markets, as well as leaders. As you begin to apply your new rules and commit to following them even when your mind tells you no, you'll see the profits start rolling in. Maybe you will make this list of legendary investors someday.

The Best And Worst Ways To Raise Cash Quickly

Despite even the most careful planning, people can find themselves needing to raise cash on short notice. These situations are often emergencies and the pressures and worry that go with them often lead people to take the fastest or easiest routes to raising cash, but not necessarily the best. To the extent that someone can keep their wits about them and make informed decisions under difficult circumstances, it is possible to raise cash in ways that may not have bad long-term consequences.

Emergency Savings - Build Them Now!

Before going over some of the ways that people can raise cash on short notice, it is worth mentioning that people should never put themselves in that situation to begin with if they can help it. Everyone should strive to have three months (or more) of emergency savings in the bank - ideally in a high-yield online savings account or a money market account. Next to eliminating credit card debt, building an emergency nest egg is one of the most fundamental steps in planning for a better financial future.

Do You Really Need Cash?

Before assaulting the couch cushions in search of lost change, consider whether or not cash is really needed. Maybe the "emergency" is a forgotten birthday, a broken appliance, or a sudden need to travel to see family. In these cases, you may already have non-cash alternatives on hand. Many people receive gift cards and then forget to use them; an unexploited gift card can certainly do in a pinch if you need to give a gift; either through re-gifting the card or actually selecting something for them.

Along similar lines, there are many credit card programs out there with rewards programs. While some cards pay out cold hard cash (or have a cash option), others build points that can be used to get merchandise, gift cards, airline tickets and so on. While it is almost impossible to exchange rewards merchandise or tickets for cash, there may be cases where the merchandise or ticket itself fills the gap and solves the problem.

The Worst Options

Apart from borrowing from friends and family (which may be an absolute no-go for some people), the worst ways to raise cash in a pinch come with high interest and expenses attached to them. A payday loan, for instance, is certainly one way of getting hundreds (and in some cases, thousands) of rupees with virtually no collateral and minimal paperwork. Unfortunately, the effective interest rates on these loans (including various fees and charges) can easily exceed 100% per year. If it's truly a life-or-death situation and there is no other way, it is an option, but it is a very poor option.

Along similar lines, title loans (loans where the title to the borrower's car is used as collateral) are a very expensive and risky option for raising money. People should also be very careful of using cash advances from credit cards. While these can be very convenient, the interest rates are very high. What's more, unlike normal purchases, interest on cash advances typically accrues from the moment the advance is made.

Bad (But Not the Worst) Options

Although not a "good" option by any stretch, withdrawing money from a retirement account is arguably better than borrowing from a payday lender. The problem with these withdrawals is that the government not only charges regular tax on the amount involved, but also a penalty on top of that. There is a loophole, though. When you transfer an IRA, you can elect to have the money sent to you, with the understanding that you must deposit it into the new IRA account within 60 days or face that withdrawal penalty. Assuming that you are sure you can replace the money within the 60 days, it is at least theoretically possible to use an IRA transfer as a temporary "loan" to yourself. Be warned, though, the IRS only allows one such transfer per year. (Avoid paying excess taxes by learning some simple transfer rules).

People can also raise cash by selling CDs or savings bonds before they have matured. There is always an opportunity cost involved (and often a penalty to the interest rate for a CD), but it is a quick and legal way to raise cash. A less convenient alternative is to sell collectibles, like coins, stamps or jewelry. Unfortunately, a fast sale often means selling at retail shop and that means wide bid/ask spreads and little chance of getting fair value.

Writing covered calls is also an option to consider for producing cash. With a covered call, an investor basically sells the right to buy shares he or she already owns at a predetermined price in exchange for a small premium. That premium goes into the investor's account and can be drawn out like any other cash. Keep in mind, though, that if the stock moves up to a price where the call can be exercised, those shares will be sold.

Better Options

One of the better options for raising cash on the quick is to sell losing positions in a portfolio. If there is a stock, ETF or mutual fund that has been a disappointment, it could be a good source of emergency cash. Do be sure to keep in mind any tax ramifications, as well as wash sale rules, but it is better to raise cash by selling stocks that are broken than those positions that are still promising and undervalued.

Borrowing against a life insurance policy or 401(k) is another option to consider, when circumstances allow it. In the case of life insurance policies in particular, the rates for loans are often fairly competitive and the payback terms are generally quite flexible. With 401(k)s, a fairly large percentage of plans allow these loans and the terms are usually much better than borrowing from credit cards or payday lenders (though be careful of the fees). The biggest risks to keep in mind are the opportunity costs of pulling money out of retirement savings and the fact that a failure to pay back the loan will be treated as an early withdrawal and incur that 10% penalty.

It may sound baffling crazy, but sometimes a pawn loan may be one of the best options for raising cash. If you have certain reliably popular pawnable items like gold jewelry, musicals instruments, tools and firearms, this could be a good option. It is true that pawn loans carry high interest, but that is only relevant if you attempt to redeem the item - in other words, you may regard a pawn "loan" as an opportunity to sell these items and raise cash. Now a pawn shop will never pay full value - 50% to 75% is the best to expect - but if you cannot wait for a buyer or bidder on Craigslist, eBay or other sale sites to appear, selling to a pawnbroker is something to consider.

Plan Better and Find the Least-Worst Path

The odds are that bad circumstances will increase your need for quick cash. Still, there is no reason to make things worse by creating an even bigger problem for the future. Think through your options carefully, and look for the cheapest sources of cash you can find. And then once the crisis passes, be sure to create an emergency savings account to prevent a repeat occurrence.

Financial Careers - Tips on Effectively Exploring the Financial Industry

Have you chosen your career yet? There are lots of options available these days. It is important to find out the area in which you have interest. You must always choose your profession by choice and not by compulsion. There are various industries present in our country. 

Among these industries the financial industry is quite popular and lots of people show interest in this industry. The major reasons of people choosing this industry is the kind of work they offer and the salary they offer. Lots of people are known to take up financial careers these days.

But you must always remember that the financial jobs require the most responsible people on earth. In this job you have to deal with money and lots of planning and calculations. Just a year back the world witnessed a great turmoil in the economy.

After this phase managing finance has become very important for each and every country these days. To have a stable and healthy economy the country needs able, intelligent and honest employees in the field of finance. These days the industry chooses people who have a strong background in finance.

So if you are interested in the financial service careers then you must start planning it earlier and take up courses that can help you have a good knowledge about this filed. You can search for the financial jobs on the internet.

If you want goof financial careers then make sure you explore the entire industry before joining into a job. There are so many things you can do in this industry. You can either join the banks or even the investment companies.

Other than this, you can also choose to become a responsible accountant of a private or government company. Search for the industries where finance plays an important role. Other than banks and investments real estate can also offer you with good careers in finance.

Real estate is one of the top industries present in the United States these days. This is the reason why lots of people are trying to enter into this industry to make great financial careers.

Whichever job you choose you must make sure that you have a good hold over mathematics and have great calculation power. If you join the investment industry then you must have the capacity to influence people to get the investments done. But if you choose to be an accountant then you have loads of responsibilities to fulfill.

It will be your duty to look after the accounts of the entire company. You will also have to deal with the profits and losses of the company. You will also have to maintain various financial records of the company.

It is a difficult task. But if you are hard working and responsible person then you can surely make it to the top in your financial careers. You can also look forward to the financial planning careers but for this you must have good knowledge about planning. Follow these tips for getting into the financial jobs. 

All About Business Loans

To start the business, you will need a big investment and then regular flow of money to keep it growing.

Starting a business depends on two main things which are idea and fund. Sometimes you may get a great business idea and you may even start the foundation with a small fund but with time your need for funding will grow. To start the business, you will need a big investment and then regular flow of money to keep it growing.

 Loans

Many people start their business with some loan taken from their family or friends. These are easy but limited loans that can help in starting the business. However, soon you will need more money and then you will have to go to lenders like banks or other lending institutes. You can get loans against your asset like home. However, you must be very specific when you go for business loans.

Business loans 

Every public or private sector bank offers business loans for people who want to start a new business or want to expand their existing business. With the business loans you can cover all your business expenses like renting or buying a place, buying goods, hiring people, improving services and expanding.

Two types of business loans -

Professional loan

The professional loans are for individuals who are self employed like a doctor. Different banks have different offers for the professional loan. The amount of loan and the required security varies from bank to bank. You have to present the complete business plan and personal financial statements to the bank in order to apply for the loan. You must also bring the proof of ownership. Your tax return references are to be submitted too. Loan payment period and condition varies from bank to bank, however there are some common condition that all banks apply according to regulatory requirements. 

Trade loan

Trade loans are given by the banks to the businessmen. Some banks even grant you a trade loan up to Rs. 35 lakhs. The amount of loan depends on the factors like the size of the business and the loan period. You have to submit proof for two year’s existence of the business. You also need to present complete financial statements to the bank.

Top 7 Non-Financial Skills Required In Finance

Did you know that having top-notch mathematical skills and financial knowledge are only the tip of the iceberg when it comes to excelling as a financial professional?

In order to stick around and get ahead in finance, check out the essential non-financial skills you need to master. (Without some basic knowledge, you won't get the job. Find out what you need to know and how to prepare in Top Things To Know For An Investment Banking Interview).

The Non-Financial Skills You Need to Succeed in Finance

1. Communication Skills

Financial professionals can't just be good at crunching numbers - they must be able to communicate their knowledge with strong speaking, writing and presentation skills.

2. Relationship-Management Skills

The people skills you need to succeed as a financial professional include understanding different personality types, listening, asking the right questions, resolving conflicts, educating others and counseling clients.

Managing relationships is key whether you're dealing with subordinates, co-workers, bosses or people outside your company. When people trust you, like you and feel that you respect them, they will want to help you succeed, whether it's by speaking highly of you, promoting you or signing up to be your client.

3. Marketing and Sales Skills

Financial professionals need to be able to market their professional skills and  knowledge to prospects in their niche markets. To do so, it's imperative to have a complete understanding of both your personal strengths and your firm's professional strengths.

In marketing yourself to clients, you shouldn't just communicate how much you know, but also how much you care, because "the client's most valuable assets and their biggest daily concern is not their monetary wealth, but rather their family.

4. Project Management Ability, Organizational Skills and Attention to Detail

Any task that takes more than a few minutes is essentially a project - one that you'll need to manage effectively to be profitable. You'll need to efficiently and effectively schedule your time, manage budgets, meet deadlines and get what you need from other people in time to complete your project successfully.

Both during and after any project, staying organized and paying attention to detail are also key.

5. Problem-Solving Skills

You will always encounter problems in any job, and being able to solve them rather than cracking under pressure is essential.

To get ahead, it can also be helpful to look beyond your own personal responsibilities. By helping your coworkers solve their problems rather than simply reporting them to upper management, you'll be viewed as a team player.

6. Technological Savvy

No matter where you work, you will need to be proficient with computer hardware and software and able to pick up new programs related to your job quickly.

The more shortcuts, keys, programs and functions you know in Excel, the better off you will be in finance. You should also get familiar with marketing and communication software tools.

7. Tenacity and Ethics

A competitive personality, passion for your work and the stamina to work long hours and go above and beyond what's expected of you and what your co-workers and competitors are doing are all crucial to success in finance. At the same time, you can't be so competitive that you make poor choices, or your career and reputation will suffer.

Anticipation

Looking ahead to what bosses or clients will need from you in the immediate or even the distant future will help you rise to the top. It's not enough to just solve the day-to-day challenges of your job; you must be able to think long term. Consider the following:

What skills can you develop and what accomplishments can you put under your belt that will get you rehired if you are laid off, land you a promotion at your current company or get your foot in the door at another company?

How can you make your boss's life easier by anticipating what he or she will need from you tomorrow, next week or next month and taking care of it ahead of time?

How can you develop relationships with your clients by paying close attention to their situations? For example, if you notice that the woman who has come to you for help managing an inheritance is pregnant, realizing that she could need help saving and investing for her child's college education, updating her will and possibly creating a trust can help you create a long-term business relationship with that client.

Putting It All Together: Wisdom and Interpretation

By combining your ability to analyze numbers with skills like communication, project management and relationship development, you'll emerge as a leader and position yourself to rise to the top of your field. (Experience and hard work go a long way toward securing a position in this challenging field.

Smart ways to manage your home loan

After the festivities are over, and with the dawn of a new month, a new realisation comes home. For the fortunate few, it is a reminder to fund your bank account as the loan EMI is due after a week. For others, the money simply flew out of the bank account.

It is time for us to act like the fund manager of a mutual fund or investment fund. Taking informed decisions to manage the asset that we call home and the liability that we call housing loan. By being prudent, you can get high “returns” in the form of saving on interest outflow.

HOW TO MANAGE YOUR FUND

As a fund manager of the house, one has to find ways to maximize the benefits of the cash flows. Make a list of all the loans and savings/investments that you have made. Do you This can typically be seen with your endowment insurance plans, your EPF and PPF, the postal deposits, sometimes-even ULIPs. Why should you be investing in something when you are paying higher interest to somebody else? It is better to close all or most of these lesser returns savings/investments and divert the funds to close the home loan.

Care should be taken to replace an endowment insurance plan with a term plan of higher cover. Your employer and your EPF officer will allow withdrawal of funds from the EPF account for buying and closing the loan of a house. The PPF is not so flexible with letting go off your money. ULIPs and postal deposits can be closed only after the stipulated 3 years of lock-in.

Now let us look at the options in more detail. The best part is that the options do not in any way add to your existing budget.

PARTIAL PRE-PAYMENT

This is the easiest way to close a housing loan faster. The method is to make use of any one-time income like a bonus, salary arrears, gifts from friends/relatives, any windfall gains from shares, property sold, deposits closed, tax saving investments maturing, closure of savings that are giving you lesser returns than the housing loan, etc to partially close the housing loan.

The effect is that the one-time payments help to reduce the principal balance in the loan. And when the EMIs continue, they have lesser of the principal to cover. So the same EMIs need a lesser time to close the loan.

Banks generally allow partial pre-payment starting from 10,000 rupees. There are no charges for partial pre-payment of housing loans.

SWITCHING TO A LOWER RATE

The interest rates are in a rising trend. There are times when the interest rates will start going down too. Based on the interest rate reset period, different banks will reduce their rates at different times. If the reset interest band of your lender is a wider band, you may be at a higher interest rate for a long time after other banks have started reducing their rates.

Switching to a lower interest rate will shave off a few years from your housing loan. However, you must avoid jumping banks because of low interest rate differences. This is because there is a charge for switching loans, i.e. pre-payment penalty, which the RBI has been stressing, should be removed from the system. While some banks have already done away with it, some still charge if you do not pay from your own sources. However, it could be a matter of time till the pre-payment penalty totally removed from the system, further easing the cost burden for the borrower.

Do remember that property verification and other legal paperwork will have to be done afresh in the case of a loan transfer. Also, for a loan transfer to be effective you should have a clear track of having cleared all the EMIs on time.

INCREASING THE EMI

This is another option to close the loan faster. If you can spare a portion of an increment to increase the EMI, considerable saving could be made. For example a 30, 00,000-rupee loan for 20 years will need an EMI of 28,950 rupees. If you can spare an additional 2,300 rupees per month, the loan can be closed in 15 years.

The EMI can also be increased by making use of money that was going into an endowment insurance plan or a recurring deposit in a post office.

Increasing the EMI can be done at any point during the tenure of the loan. There are generally no charges for increasing the EMI.

CONCLUSION

Only after closing the home loan does one really become the owner of the house. Closing the loan as soon as possible not only relieves the mental strain of carrying a debt but also releases more money into the family budget.

Qualities of a Top Financial Executive

Financial executives like Controllers, Treasurers and Chief Financial Officers are often regarded in the business world as managers of financial concerns only, but the top financial executives in many companies have more than just financial expertise. In order to be the best financial executive, you have to embody the qualities of a successful manager as well as a financial expert. Here are some of those qualities explained.

Leadership Skills

A successful financial executive has to be a business leader because financial management involves more than just the accounting department. In order to effect change in a company and get the best results, a financial executive has to share their vision with other executives and inspire key business players to help them get their vision realized. The only way this can happen is if the financial executive can be a strong leader not only in financial matters but in business matters as well.

Strategic Thinking

While solid recording practices and accounting has its place, being a great financial manager isn’t just about bookkeeping. Financial management is about finding ways to fund the company’s goals, and to do this you have to know how to develop the best strategy. Top finance executives know how to think strategically and plan their efforts to get the best results. Strategy doesn’t end with planning, though. Successful financial executives need to be able to act strategically to and get their plans in motion.

Business Processing

Financial executives don’t just need to understand how money flows through a company—they need to understand key business processes in order to be successful. An understanding of business processes allows a finance executive to find the root cause of financial loss and help design processes that will be more effective and efficient. Knowledge of business processes can help you find ways to minimize costs within the company and add value to business processes.

Managing Change

Being trained in measuring the results of change makes finance executives uniquely suited to managing change in the company. Leadership skills, a good strategy and an in-depth knowledge of business processes are all necessary for any financial executive, and these skills can also help you effect change within your company in many different ways. Leadership skills allow you to get the right people to effect change. Strategic thinking and actions help you create disciplined changes that work towards a clearly defined goal, and business processes management can help you create the most effective change for your company.

Technology

Top financial executives are increasingly finding their jobs interwoven with technology. Everything from picking financial systems, to managing financial reporting, and ecommerce transactions involves both financial and technology leadership. Although developing a detailed understanding of technology is improbable for most financial professionals, you can develop relationships with IT leadership. If you do not regularly connect with senior technology executives, be sure to develop a personal relationship with the individuals responsible for driving technology. Your role as a financial executive will increasingly involve technology deployment; it is absolutely critical that you have a firm working knowledge of your systems and strong political ties to technology leadership.

As the role of the financial executive evolves from “glorified bean counter” to a strategic management, strategy, and systems expert, it is important to have a plan for your career development. Top financial executives become the centers for their organizations to which every other function is connected and dependent upon. As you plan for your career and manage within your corporation, it is vitally important to involve others as much as possible. Learn about every disparate function of the organization; Develop relationships with non-financial executives; and continually work on your management and presentation skills.

Top 10 Tax-saving Instruments for Investors!

LESSONS:

1.       Plan your tax-saving instruments – don’t leave it for the last hour.

2.       Even tax-saving investments can be routed through systematic plans.

3.       Most of the tax-saving investments are for minimum of 3 years.

4.       Determine which investment option to save taxes suits you the best.

5.       Investments with mere intention of saving taxes might backfire on you.

It’s that time of the year when most of the individuals are found scrambling to invest in tax-saving instruments just before the financial year-end. Currently, Section 80C of the Income Tax Act allows deduction of upto Rs.1 lakh from the gross total income. Plus another Rs. 20,000 for investments in infrastructure bonds if this Rs.1 lakh limit is exhausted.

Let’s have a look at some of the tax-saving options available to individuals:

1) Public Provident Fund

Public Provident Fund, or PPF, is a long-term, statutory scheme of the Central GOI. Currently, the interest rate offered through government-backed small savings scheme is around 8%, which is compounded annually. On maturity, you pay absolutely no tax under Section 80C.

This long-term scheme is for 15 years; hence if your investment horizon is short-term in nature, PPF is not meant for you as it locks your liquidity for a relatively long period of time. In this scheme, you need to invest a minimum deposit of Rs.500 and up-to maximum of Rs.70,000 in a financial.

2) Unit-linked Insurance Plans

Unit-linked Insurance Plans (ULIPs), which are eligible for Section 80C tax rebate, are investment products that provide dual benefits of life insurance and savings element as a one stop solution for an individual’s financial goal. However, if you don’t need insurance, going with ULIP is not the best investment bet on the horizon.

Recently, insurance regulator IRDA had initiated a few corrective measures by hiking the threshold limit for ULIPs from 3 years to 5 years of lock-in period and mandated a minimum guarantee for such plans. Now, the policyholders can also opt for pre-mature exit without any penalty.

3) Equity-linked Savings Scheme

Equity-linked Savings Scheme (ELSS) is mutual funds that help you save taxes under Section 80C as well as generate decent long-term returns from the equity markets. Such schemes are typically characterized by a three-year lock-in period.

However, the tax benefits of ELSS will be phased out with the introduction of the Direct Tax Code (DTC) starting from April 1, 2012. But, the revised code mandates that existing ELSS funds will be able to claim tax-exemptions. So, this might just be your last opportunity to put money is lucrative tax-saving mutual funds.

4) 5-Year Bank Fixed Deposits

You might be thinking how come bank fixed deposits are included in tax-saving schemes? Since 2006, Bank Term Deposits which are of over 5 years tenure and upto Rs.1 lakh are allowed exemption under Section 80C of the Income Tax Act, 1961. Such deposits should necessarily be in the RBI mentioned list of Scheduled Banks.

Most of such tax-saving fixed deposit avenues are of fixed tenure and do not allow pre-mature withdrawal facility. Further, such term deposits cannot be pledged to secure a loan. Most importantly, the biggest drawback of this scheme is that the interest for the amount deposited is taxable.

5) Employee’s Provident Fund

Salaried individuals are compulsorily required to contribute 12% of the sum of basic pay and dearness allowance to Employee’s Provident Fund (EPF). This sum is deducted by the employers from the monthly payroll of employees as a social security scheme akin to a forced-saving towards retirement planning.  

EPF brings with it key benefits as a fixed-income instrument providing tax benefits under Section 80C at the time of investment. Even the returns from EPF are tax free on maturity. The employer also has to make a matching contribution to the EPF.

6) National Savings Certificate

The 8% returns from National Savings Certificate (NSC) are not only assured and tax exempt under Section 80C, but also government guaranteed. Unlike PPF, NSCs have no upper limit on the maximum amount that can be invested in a fiscal year.

This small saving scheme offers tax-free initial deposit for 6 years. However, interest in NSC is taxable. But, the interest for the first 5 years is eligible for a deduction as NSC is a cumulative scheme – where interest is reinvested and is qualified under fresh deduction in NSC.

7) Infrastructure Bonds

In Union Budget 2010, Finance Minister Pranab Mukherjee proposed the deduction for funds flowing in long-term infrastructure bonds in India upto Rs.20,000 under Section 80 CCF of the IT Act, 1961.

These bonds issued by RBI-notified entities carry long tenures of 5-10 years for facilitating investment in infrastructure projects within the country. The interest earned can vary from 7.5% to 8.5% depending upon the issuer and investment option chosen. For the investors at highest tax bracket, such investments can bring in savings of upto around Rs. 6000.

8) Insurance, 9) Health Premiums & 10) Tuition Fees

You can claim tax benefits for the health insurance premiums to the extent of Rs. 15000 under Section 80D. Moreover, you can also claim an equal amount of deduction for buying medical policies for your parents. Any amount paid towards life insurance premium for yourself or your family is eligible for tax break under Section 80C.

If you’re paying tuition fees for your children’s full-time education, you are eligible for tax deduction under Section 80C. Mind you, the said tax benefit is not for the donations paid to such institutions.