Mutual Fund investments do not guarantee but expert advisors can really help you make the most out of the fund you have invested in. The right advice helps people achieve their goals and the same is the case with investments. Talking about the advice, the best one can be to invest in ELSS funds.
These are Tax Saving Mutual funds providing tax rebate u/s 80C upto Rs 1.5 Lakhs. The ideal way of investing is to diversify the investments in 2 or 3 top mutual funds in any category.
Those who are new to Mutual Fund investments, you must know that there is no such thing like best mutual funds. However, there are funds that are beneficial for those who have the clarity of their future plans. In simple words, crystal clear financial objective is the base of any investment and if you have it, you can surely make the right choice.
On the one hand, the last performance of the funds might have won the title of being the best were absent from the next 3 years top-performing mutual funds list. Thus, there are ups and downs in this investment tool but funds ELSS funds are still beneficial. You can at least save tax on your investment. So, here are the basic things you should know about this type of fund.
ELSS Funds Meaning
Equity Linked Mutual Funds (ELSS), commonly known as Tax Saving Mutual funds provide tax rebate u/s 80C upto Rs 1.5 Lakhs. Apart from this, they provide higher returns as the funds invest in direct equity. You can invest more than Rs 1.5 Lakhs but not qualify for 80C saving beyond this amount. They have a lock-in period of 3 years from the date of investment. The investor can keep the fund beyond 3 years too for long-term investment. You can invest in ELSS funds through Systematic Investment Plan (SIP). But, before that, let us give you a brief review on the advantages of ELSS funds that will surely catch your attention.
Advantages of investing in ELSS Funds
- Offers highest returns (not fixed and not guaranteed) compared to other tax saving schemes like PPF and NSC
- Lowest lock-in period of 3 years. NSC has 6 years and PPF has 15 year lock in period
- Investors can opt for dividend option and get regular income even during the lock-in period
- Investing in ELSS funds through SIP every month would help you reduce the burden of investing a lump sum, take care of market fluctuations and provide higher returns. However one should note that 3 year lock-in period applies to each and every SIP.
What will make you invest in ELSS Funds?
If the above description has not been satisfactory enough, here we are bringing to you the must-to-check reasons of investing in Tax Saving ELSS funds.
Purpose of investment: If you want to save tax under section 80C, you can invest in Tax Saving ELSS portfolio. Since both the investments and returns are Tax-exempt upto a limit of 1.5L under section 80C.
Ideal way of investing: The most simple way to invest is through SIP (systematic investment plan).
How much to invest: The investment amount required is Rs. 10,000 per month (total for the year will reach to 1.2 Lac, rest can be your EPF, etc.)
Ideal investment duration: Even though the 3 year lock-in period applies to each and every SIP, the ideal time period to continue the investment is more than 5 years.
Rationale: Has Tax Saving ELSS funds diversified across top performing mutual funds.
Top ELSS Funds
If you are planning to invest in this toil where you can save on tax, here are some of the Best ELSS funds. So, go through the list and invest in the Best Tax Saving mutual fund.
- DSP BlackRock ELSS
- Reliance Tax Saver (ELSS) Fund
- ICICI Prudential Long Term Equity Fund (Tax Saving)
How to invest in ELSS?
As mentioned above, you can invest in ELSS funds through SIP. Since the tax exemption is only up to Rs. 1.5 lakhs, you will have to maintain the SIP amount accordingly. You can go for Rs. 10,000 monthly SIP and the rest investments like EPF will make up for the rest amount.
Disclaimer - Mutual Funds are subject to market risks. Please read the scheme related documents carefully before investing.
No comments:
Post a Comment