A step-by-step guide to your first financial plan - PART IV

Tax planning

You can save up to Rs 1,20,000 under section 80 C. Out of this Rs 20,000 needs to be invested in infrastructure bonds and the balance Rs 100000 can be invested in NSCs, PPF, insurance premiums, and ELSS mutual funds.

You may choose to give the maximum allocation to ELSS mutual funds, since you have the benefit of youth and beign at the beginning of your career.

Other goals

You may have other goals like buying a laptop, higher studies and vacations. You need to plan for all these goals. You need to keep in mind two things before deciding an investment. They are your risk tolerance and time horizon.

How much risk can you afford to take and psychologically comfortable taking? When do you need this money back? Based on the answers to these questions you need to choose the right kind of investment plan.

Plan out your work and work out your plan. Beginning your financial planning early on in your career will put you in an economically sounder position as you increase you earnings and your spending as well.