What investing alternatives are available to a new employee?

Starting to invest and save with your first paycheck is a great idea, and if you can reduce your taxes as a result, that is an added bonus.

Starting to save and invest right away with your first paycheck is a great idea, and if you can reduce your taxes as a result, all the better. 

Along with your automatic Employee Provident Fund tax deduction, you may also want to think about investing through Systematic Investment Plans (SIPs) in Equity Linked Savings Schemes (ELSS) of mutual funds under Section 80C. ELSS funds are tax-advantaged mutual funds with a three-year lock-in period that invest in equities.

You can also think about opening a National Pension System (NPS) account so that you can deduct up to $50,000 annually from your income while saving for your retirement. You might think about purchasing term insurance, but only if you have monetary dependents. You might also think about getting separate health insurance for yourself and your parents, which would also qualify you for further tax breaks under section 80D.

FDs offer higher returns than liquid funds, which are designed for ultra-short-term investments and are, as their name implies, liquid. 

If you have the time to hold the investment for a while, you should consider investing in FDs. If you have more than three years to invest, you should think about debt mutual funds or even FMP ( fixed maturity plans). 

The returns will be comparable to bank deposits once more, but this time there is a tax benefit since capital gains are taxed differently than other income sources, which is the case with bank deposits, which are taxed at your marginal rate of taxation.

Check to determine if your workplace offers a defined contribution retirement plan, such as a 401(k) or 403(b) plan, before beginning your first employment or any new job. Some firms sign up new hires for these programmes automatically. But typically, you have to enlist yourself and make the initial move.

When your income rises and you have more to save, you can create an account with a relatively low initial contribution and increase it later. Saving enough money for retirement requires early planning. The longer your investments have to grow, the younger you are when you start saving. Try to avoid the need to cash out these accounts and spend the money when you move jobs or believe you need some more income. Instead, find out if transferring plans makes sense by speaking with a tax advisor. Your investment return can go up if your new plan has reduced fees.