ELSS is an Equity Mutual Fund Schemes. Investment in ELSS is basically depended upon your long-term financial goals. If your financial horizon is short, it is not the best idea to invest in ELSS Funds.
For many investors, ELSS is the very first step to start investing in Mutual Fund Schemes. They start investing to save taxes through ELSS. Then the investor slowly starts to invest in other Mutual Fund Schemes.
There is no right or wrong time to invest in ELSS. For investors, last three months of the Financial Year are known as the Tax-Saving season. When an investor invests in ELSS Mutual Funds he got a tax deduction of Rs. 1.5 Lakh under Income Tax Act of India (Under section 80C). Equity Linked Savings Schemes (ELSS) come with a lock-in period of three years.
Public Provident Fund (PPF) and National Savings Certificate(NSC) are other tax-saving options available in the market. PPF is run by the Ministry of Finance and NSC is run by the Indian Postal Service of India.
Public Provident Fund (PPF) come with a duration-period of 15 years but you can partially withdraw after 5 years. National Savings Certificate(NSC) has a lock-in period of 5 years (NSC VII) & 10 years (NSC IX). These government-sponsored funds are safe and offer guaranteed return.
ELSS is riskier than these government-sponsored funds. Because ELSS invest in stocks & stocks are risky and unstable in the short-term. You have to be careful about the risk, return and the lock-in period. ELSS gives good return in long-term investment horizon such as 5 to 7 years.
Systematic Investment Plan (SIP) is the best way to start investing in ELSS Mutual Fund Schemes. When you start a SIP, the money will be invested automatically through your bank account to ELSS Schemes.
If you have a large amount to invest, you can invest in two different ELSS Schemes. If you have a small amount, it’s better to stick just one scheme.
Best ELSS Mutual Funds Tax to invest in Financial Year 2017-2018 :
- Axis Long Term Equity Fund
- Birla Sun Life Tax Relief ’96
- DSP Blackrock Tax Saver Fund
- Franklin India Taxshield Fund
- Reliance Tax Saver Fund
