The ELSS is no doubt the one of the best option to avail tax benefit under Sec 80C of Income Tax Act 1961. If you are still in doubt this article will try to explain the benefits through some pictures. The Equity Linked Savings Schemes or ELSS are pure Equity Diversified Funds. So they bring the same benefits, risk, and rewards that you get when you invest in Equity Mutual Funds. Let’s try to understand their benefits, features & their returns.
I have also included the Top 10 Best Funds (By Rating Only). The average returns of these funds for Last 3 Years are over 22% CAGR. I have taken Direct options only hence the returns are limited to 3 years as 5 years data is not available.
Download Free Book on ELSS – Details & Comparison
Hey check this out: There is a video about benefits of ELSS by Courtsey CIEL
Before I take you further there are 3 simple pieces of advice:
1 .To invest in ELSS fund, you need to be comfortable with equity investing. No fixed Returns or indicative returns are promised. The investment is totally in hands of equity markets performance. Hence the tried and tested rules to reduce risk like-
- invest for the long term
- invest through SIPs, and
- invest as per asset allocation
Will help you get most of this option.
2. However the funds have a lock-in for 3 years only but, the investment in ELSS should be for more than 5 years at the minimum.
3. The best way is to include this investment in your long term goals. Your Financial Advisor would have definitely done so and that is the right way to invest.
So here we start:
I am not comparing ELSS to PPF as we feel PPF is among the best investments even though the rate has come down in recent times. But it still is tax-free. And, this feature makes it a good investment and hence it is included as debt asset in the overall portfolio of an investor. Read Conversation Between ELSS & PPF.
And here are the TOP 10 Funds as on 19 Jan 2017.
Hope this article will help you find the right product for tax saving this year and in coming years. Do share the article so that others may benefit.
Also, share your comments below if you have invested in ELSS and how do you feel about it.
TO invest in MF the ELSS way which one would be recommended
1. If there is by ant means i can directly invest and capitalise the fund by self,
2. Take help of fund manager by investing through corporates like HDFC banker or Share Khan etc
Can you please suggest which way is recommended. Also if i take the 2nd way which fund manager provideder has got good repo.
Hi Saroj,
Yes, you can buy ELSS funds directly through mutual funds website, physically going to the office of the mutual funds or by using MF utility. Few other intermediaries also allow investing in direct MFs through their portal by charging nominal one-time fees. Investing through a broker as you mentioned means that they will make you invest in Regular Plans and not the Direct Plans.