Investment

Making investments for saving tax v/s making investments that can yield you high returns

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A financially stable future through savings has been proclaimed as the ‘best way,’ when in reality, investing the saved amount to allow it to grow over time and create wealth has trumped traditional savings. Additionally, some investors choose high-interest yielding investment options while others prefer investing to save tax.

Although investing in tax-saving instruments can prove fruitful, investors increasingly prefer financial products that generate returns higher than simply saving tax. With technological advancement at its peak, online peer-to-peer platforms are witnessing increased investments by investors looking to diversify their portfolio and reduce market-linked losses.

The Investment Dilemma: Tax Saving or High Returns?

Investment tools under section 80C such as insurance, PPF, EPF, etc. were originally designed to offer a systematic investment option to investors, but are being more commonly used for their tax-saving ability. Among the tax-saving instruments, insurance policies witness the highest investment owing to the tax deductions offered on the insurance premium. In their quest to save as much tax as possible, investors tend to overdo tax-saving investments, rendering their portfolio almost irrelevant or a burden in the long-term.

Furthermore, tax-saving instruments are a multi-year commitment that becomes inflexible as investor priorities can change over time. Although the long-term returns are good, more investors are choosing P2P investments that shadow issues related to other investment options, while providing the same, if not higher, returns.

Why P2P investments?

The Indian Finance Minister, in the recently announced Union Budget, lowered the tax slabs allowing its citizens to save more. However, opting for the new tax slabs entails surrendering 70 tax exemptions listed under section 80C and 80D, resulting in more savings but without the option to invest them in 70% of the tax savings instruments. For people who aspire to save more by through the new tax slabs, P2P investing is the best alternative.

Through the P2P lending platform, investors can systematically earn good returns on their desired amount by choosing the type of borrowers they want to lend their money. As the borrowers are verified through machine learning-based credit underwriting, the investments come with minimal risk of default. The investors are repaid by borrowers in EMIs on the loans credited to their accounts monthly.

P2P Lending Platforms: The Better Investment Choice

Since the introduction of technologically-backed P2P platforms, these digital investments have proven themselves as an ideal low-risk high return investment option. With the new tax slabs and the subsequent tax-saving restrictions, P2P investments provide leeway for investors to opt for lower tax slabs, save more, and multiply their savings.

One such leading P2P lending platform is RupeeCircle. By leveraging its mix of ingenious algorithms and creative features, people can commence their investment journey and obtain the highest returns while mitigating market volatility and fluctuations. For more information on achieving financial stability through P2P investments, visit RupeeCircle or download the RupeeCircle app on Google Play Store.

This article is authored by Nikhil Prabhakar, Head of Marketing & Products at RupeeCircle. He is an alumnus of IIM Ahmedabad & ESCP Paris and has 10+ years of work experience across multiple industries like Fintech, IT & Energy. He is an active investor across equity, derivatives, debt and real estate.

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