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It is a hot topic of discussion among every smart investor that they should consider a particular scheme with an aim to generate high returns or it is the tax-friendliness that matters the most when investing. However, taking into account the importance of both, the solution to this troubling issues is investment in the funds of Equity Linked Savings Scheme or simply ELSS category. Such funds are best-suited to the clients who are looking for a perfect blend of tax-saver and return generating instruments. Out of the many options available for investors who want to make use of the exemption limits provided under Income Tax section 80(C), ELSSs are the most reliable and high-end performance funds. They can be used for wealth generation as they majorly invest in equities to ensure the influx of long-term yields.
Let’s first discuss some of the advantages of investing in the mutual funds of this category!
What’s So Special About Them?
Tax Savings Under Section 80 C: With investment in this category, an investor can claim deduction up to Rs. 1,50,000 under section 80C of the Income Tax Act, 1961. Being an equity diversified fund, investors get to enjoy both the benefits of capital appreciation, as well as tax benefits.
Lowest Lock-in Period: Considering all the other tax-saving instruments, ELSS mutual funds has the lowest lock-in period of only three years. To compare, Tax Saving FDs & ULIPs have five-year lock-in, and PPF has a lock-in of 15 years (with the option of partial withdrawal from 6th year).
Equity Exposure: If you wish to invest with a motive of creating wealth and beating inflation, then equities are the best options available. With the help of ELSS funds, you can get the exposure to equity investments through a less risky path. It is a safer option than direct equity investment as it provides diversification. Alongside, it offers considerably higher returns than other asset classes in the long run.
Tax-free Returns: One of the best benefits that you get to enjoy after investing in an ELSS fund is that the returns generated from it are entirely tax-free. However, this applies to the gains from equity mutual funds which are redeemed post one year of investment.
Some of the best ELSS funds that you can choose to invest in as recommended by the experts at MySIPonline:
Axis Long-Term Equity Fund (G) : This fantastic scheme of Axis Mutual Fund is an open-ended fund which does its asset allocation majorly in Equity and related instruments. With a slight rise in its value, the NAV of this fund stood at Rs. 41.5942 as on January 4, 2018, with assets under its watch mounting to Rs. 15,408 crore. Till date, the fund has performed exceptionally well yielding 37.03% and 12.44% in a one-year and three-year investment period, respectively.
Reliance Tax Saver ELSS Fund (G) : This scheme of Reliance Mutual Fund maintains a perfect balance between large-cap companies and mid-cap companies. Its major invested areas include banks, industrial capital goods, automobile, software, and cement. With an increase of 0.93% in its value, the NAV of this fund stood at Rs. 69.56 as on January 4, 2018, and the assets managed under its shade are of worth Rs. 10,157 crore. There has been a remarkable rise in the returns scaling to 45.65% and 13.89% over a one-year and three-year investment period, respectively.
To know more about these schemes mentioned above, visit our official website at www.mysiponline.com. In case you’re looking for other options to make a comparison before making an investment or a customized investment plan, then get associated with us at the drop of a hat. We are waiting to serve you with our best.