For the perfect portfolio, don’t just pick good funds, but also ones that work well together. Five large-cap-oriented funds won’t diversify your portfolio the same way as two large-cap, one mid-cap and one thematic/ sector fund would. Stick to a maximum of seven funds. These must be a mix from various asset management companies, fund managers, investment styles and objectives. Two of these funds can be your holdings and they should always be diversified equity funds. The rest can be sector, thematic, mid- and small-cap funds and other speciality offerings. It’s all very well to be bullish on a sector, but never let a sector fund be the core holding in your portfolio. Never let any one sector dominate.
Save a lakh from the taxman
• The annual deduction for medical insurance has been raised to Rs35,000.
• Loan repayment for a self- occupied house gets you a deduction of up to Rs2.5 lakh.
• You can save taxes by investing up to Rs1 lakh in a pension plan.
• Life insurance premium entitles you to a deduction of
up to Rs1 lakh.
• You can save taxes by investing Rs1 lakh in the equity market via equity linked savings schemes.
• Interest paid on an education loan is deductible without limit.
• School tuition fees paid for your children are deductible under section 80C.
• Stamp duty and registration fees paid towards a house is deductible under section 80C.
• If eligible, you can get a deduction for rent up to Rs24,000 under section 80GG.
• You can claim HRA exemption by living in your spouse’s/ father’s house and paying rent to them.
• Remember, the Rs1 lakh in tax savings is the cumulative savings from section 80C and other deductions.