Deepa Venkatraghvan is a personal finance editor, www.moneycontrol.com. A chartered accountant, Deepa counts financial education as one of her life's motives.

This is the transcript of the live chat Deepa had with indiwo.com readers, on the issues about personal finance, keeping in mind the budget 08-09

khristina.patra asks:
Hi Deepa, am really a newbie regarding finance. I just wanted to know, how do you know how much you have to invest with regards to how much you are earning?
 

Answer:
Hi Khristina, you need to first calculate your tax. If your tax is more than 30,000 then you have to invest the entire Rs 1 lakh. If it is lower, then you have to invest in proportion. You can use this calculator to figure that out - Adjust the investment figure till your tax is zero.

vids asks:
Is opening a savings account with a nationalised bank a good idea? Or is there any other way to save money more efficiently?

Answer:
Ideally, you should keep cash that is equivalent to 3 months' expenses in your savings account. Anything above that can be invested smartly to make good returns. Where you invest will depend on when you need the money. If you need the money within a year, a debt mutual fund will be a good idea. If it is for a longer term, you may consider bank FDs or balanced or equity mutual funds.

lyla348 asks:
I am 30 years old and my salary is in bracket of 5 lakh plus, how much amount do i need to invest to get maximum tax benefit? Also which ULIP mutual fund is the best in volatile market situation?

Answer:
You are in the highest tax slab. Hence you would have to invest the entire Rs 1 lakh that is available for deduction. As for ULIPs or mutual funds (they are 2 different instruments) choose one with lowest charges. You will be able to find out the charges from the brochures. Also, you must stay invested in equity ULIPs or MF for at least 5-7 years and that will enable you to beat short term volatilities.

poulomi asks:
Hi Deepa, I have just started earning and would like to invest around 2,000 every month. What would be the safest and best option?

Answer:
its nice to know that you have planned to start investing so early. you must choose a good equity mutual fund or a good equity linked saving scheme (ELSS) offered by a mutual fund. ask the agent for a systematic investing option. you can invest Rs 2000 every month. remember that equities are not 'safe' for teh short term. however, if you hold them for more than 5-7 years you can beat short term fluctuations in prices. if you want to invest for less than 5 years, i would suggest that you opt for a bank recurring deposit.

mirasdhokekar asks:
Hi Deepa, I am a freelancer and TDS certificates are a problem. Is there anyway I can save the tax there? Also I have some LIC insurance policies, which are not giving me much benefit - any alternate option to invest?

Answer:
Whether you are a freelancer or on the payroll of a company, you can invest up to Rs 1 lakh to save tax. In your case, you will have to make investments and claim the refund at the time of filing the returns, that is in june. as for your lic policies, you have the option of surrendering them but you will lose out on surrender charges.
Alternately, you can make your policy paid up - that is - you can covert your policy by making the premiums paid till date as a one time premium. In which case, you do not have to invest in them in the future. You can employ your money better. if you do not need life insurance, you can choose mutual funds.

shilpa_d10 asks:
hi Deepa, if my anual income is above 3 laks, how much tax I need to Pay? and how much saving I need to do?

Answer:
You can use this calculator to check your exact tax liability. Adjust the investment figure till your tax amount reduces to zero. Remember that you cannot invest more than 1 lakh to save tax.