Now, having known the tax slab in which you fall, get ready to make some investments. If you are among those who have already invested, kudos to you!!
Lets deal with the investments avenues made available by the government, which are
1. Life Insurance
2. Public Provident Fund (PPF)
3. National Saving Certificate (NSC)
4. Equity Linked Saving Schemes (ELSS)
5. Provident Fund (PF)
6. Principal Home Loan Repayment

A mixture of investments in the above-mentioned instruments should be just perfect to get the best returns and security. Besides giving returns, some investments like life insurance gives protection for the tenure chosen by you. In all, a combination of the investments mentioned above serves a good tax-planning regime. To ease you with your tax planning exercise, the following strategy has been charted out below that should help you in planning it efficiently.

1. Evaluate your existing investments:
Assuming that you have made some investments in the tax saving instruments, its time for you to review it. For example, if you have a life insurance policy of a sum assured of Rs. 2 lakhs, may be its time for you to increase your cover by say Rs. 3 lakhs. So the total sum assured that you should now have be Rs. 5 lakhs.
Also, investments like unit linked insurance plans should be given special attention because it is a blend of insurance and stock investments. Utmost care should be taken so that the purpose of buying an insurance cover does not get defeated. A proper insurance planning is essential to get the best out of it.

2. Fixed Returns:
Accumulating wealth through fast and risky instruments like mutual funds, stock investments, etc. have its own merits and demerits but investing in fixed return investments have its unique identity and it should not be overlooked.
Public Provident Fund, National Saving Certificate, Provident Fund, Fixed Deposits, etc. are forms of fixed investments. They are suited for investors who share a low risk profile. Besides, one need not invest the entire investible corpus in the equities; a proportion could be drafted out like say 70:30 where, 70% of the investible amount can be invested in equities and the rest could be invested in the debt options. Also an employee is eligible for tax benefits under section 80C for Employees Provident Fund (EPF).

3. Right Asset Allocation:
Lets take into account an investor who already has an insurance policy (endowment plan), the premiums for which is Rs. 40,000 annually. Section 80C gives one the tax benefit of Rs. 1 lakh, so the investor will have to make an investment of Rs. 60,000 (1,00,000-40,000). So the investor can consider other avenues for investing but the limit that he will now have is Rs. 60,000. The individual can think of investing in Fixed Deposits (FDs) for a term of five years to get the tax benefits u/s 80C.

4. Execute your investment plans:
Having decided your avenues to invest, it’s time for some Plan of Action. This should be your last step towards tax planning exercise. Execution of your plans is the only way through which you can reach you targets. Researchers and Analysts share the common view of staying invested in equities for longer time frames. By doing so, one minimizes the risk and can be assured for getting reasonable returns.

Do not forget to consider factors like your children’s needs and requirements that could bulge from further studies, marriage or it could be setting up your own business.

In all, your investments should be such that it helps you save and at the same time yield some reasonable returns. A wrong approach or decision can lead you to disappointing situations.

Every investor making investments in some or the other instruments expects some proceeds in return. Entering the stock market with investment plans is a risky option but it can yield returns too. In the days when the market is soaring high, one enjoys the benefits but when the market is bearish it becomes a difficult sight to see your investment proceeds dropping low by every minute. What can one do in such a scenario?

Lets see what are some common mistakes that an investor makes:

1. Short term plans:
Investors who enter the stock market with short-term goals need to bear in mind that long-term investment planning bears more fruits. Entering the stock market with short-term goals is just not the answer.
Lack of knowledge is also one of the reasons for making investment blunders. There are instances of people who do not wish to stay invested when the market is performing rather poorly. After all it is an individual’s choice but debt investments like National Saving Certificate, Public Provident Fund gains sudden attention. On the other hand, some investments are made just for the sake of it. Just to evade tax payment, a last minute rush is made to buy the insurance policy that suits neither your needs nor requirements. Instead a well-analysed insurance plan should help you in getting the best out of it.

2 . Making incorrect choices:
A person making investments in instruments like mutual funds, stocks need to keep a track of the performance of the funds. Sometimes the selection of the company may be right but the choice of the funds may be wrong or it could happen the other way round too! Whenever investing in these funds, a bit of research of the company’s investment strategies will help you immensely. For example when investing in mutual funds, try to know the sectors in which the company is making an investment and in what proportion. This should help you to make up your mind. For example a major part of the assets is being invested in say ‘pharma’ sector and if its suits you, then take the plunge into it accordingly.

3. Widen your horizons:
An investor needs to widen his/her horizons. In the name of diversification one cannot keep on piling investments one after the other. More than the addition of new investments, one has to make a proper choice of a good performing fund. One needs to think beyond the literal meaning of ‘diversifying’ funds, which has to be done with an understanding for it.
There still exists a huge problem among people who invest by quantity than by quality. New Fund Offers (NFO) charge Rs. 10 per unit. For an amount as small as this, one need not necessarily invest in every NFO that hits the market. Instead a fund that has a good track record should be chosen than choosing a fund that you do not have much knowledge or track record about.

4.Set your deadline:
If you belong to the stage of ‘wealth accumulation’ then you need to chalk out your plans smartly. Better still, if you have kept a deadline. Say for example, an individual whose age is 23 years has a set a deadline of five years after which he/she wishes to receive a stipulated amount. If the need be one should shift the ‘moolah’ from equities to fixed return investments. Say for example, the stock market performs exceedingly well and you have reaped superb proceeds, then it would be advisable to shift your money in other safe instruments for by the time you reach the target of five years, the market may or may not be able to sustain its good performance.