Find your personal balance between 80C tax saving and keeping accessible savings. Get your tax-liquidity score and optimal allocation.
| Instrument | Lock-in | Expected Return | Liquidity | 80C Limit |
|---|---|---|---|---|
| ELSS | 3 years | 12–15% CAGR | High after 3yr | ₹1.5L |
| PPF | 15 years | 7.1% EEE | Partial after 5yr | ₹1.5L |
| NPS | Till 60 yrs | 10–12% CAGR | Very low | ₹1.5L + ₹50K |
| ULIP | 5 years | 8–10% (after charges) | Moderate | ₹1.5L |
| Tax-saver FD | 5 years | 7–7.5% (taxable) | No withdrawal | ₹1.5L |
The most common mistake in Indian tax planning is locking away too much money in long-term instruments just to save tax, while neglecting liquidity. Taxes saved on ₹1.5L at 30% = ₹46,800. But if you need emergency funds and have to break an FD prematurely or take a personal loan at 18%, you lose far more.
No. Build 3 months of emergency funds first. Then invest in ELSS (or PPF) for 80C. Without liquid reserves, you may be forced to borrow at 18–24% for emergencies — the interest cost far exceeds the tax saving.
ELSS wins on liquidity. Although both have a 3-year and 5-year lock-in respectively, after the lock-in ELSS can be partially redeemed at any time. Tax-saver FDs cannot be broken at all during the 5-year lock-in.
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