** All the characters in this conversation are real. Resemblance to any common man is purely intentional ;) **
Mango Man is 30 years old, a team leader at his office, always cursing the manager and wanting to become one. He gets a decent salary and he has also become an investment expert in last 7 years of his job (after all he has proudly saved so much tax in those years). While our Mango Man is having a sip of coffee at Star*ucks with his tax saved money, he happens to get caught up by SP Guru (A mysterious man who talks something which people think is too philosophical).
GURU: You must be feeling very proud of yourself as you recently filed tax return and saved'loads' of tax. And you would have even become the advisor to your friends and family, telling them all the tactics to save taxes. Well, it hurts :( at least to me.
Mango Man: Why does it hurt you?
GURU: Well, I am not jealous of you saving some money, but I get worried when you lose better opportunities in order to only save taxes.
Mango Man: Huh, isn't so called 'Financial Planning' about finding strange ways to save taxes?
GURU: Had you been a little attentive to my previous lectures, you wouldn't have asked such a dumb question. Anyways, how much tax did you save last year?
Mango Man: Well, I saved as much as possible :D I invested Rs. 1 Lakh in PPF and then another Rs. 50,000 in National Savings Certificate...And, since I recently got promoted you know, I unfortunately got into 20% tax bracket; So, I saved Rs. 30,000 in taxes :D And I am pretty sure that I couldn't have saved more tax than this.
GURU: Hmmm..very intelligent..and what have you done with that Rs. 30,000 saved extra?
Mango Man: I knew that you don't have anything substantial and you would get into my private matters. But, I'll tell you so that you don't bother me again with your unsolicited advises. I have invested those Rs. 30,000 in stock markets for the long term which will save me taxes even in future :D . I think you may leave now..GURU JI
GURU: Never mind, it's my duty to educate you. Half knowledge is dangerous you know.
Mango Man: Look, enough of your philosophical drama..I'll leave and enjoy somewhere else
GURU: Wait wait, I acknowledge your intelligence. So, do you know how much your money will become after 15 years by saving these taxes?
Mango Man: Yeah, you are not that bad too. I used your calculator to calculate that and my Rs. 1 lakh saved will become more than Rs. 3.5 lakhs at an interest rate of 8.75%. And I am expecting a return of 15% on those Rs. 30,000 invested in stock markets. That shall become about Rs. 2.5 lakhs after 15 years :D . What more can anyone dream of? Saved tax, good long term return, no taxes on long term earning from stock market..Isn't it? You see, my tax saving strategy is working perfect!
So, seems like Mango Man's planning is perfect. What do you think? Do you see any problem with that? Leave your comments.
To be continued...