Things you should know before investing in ELSS funds

As more and more people are showing interest in investment plans today, Equity Linked Savings Schemes are gaining a lot of popularity. These mutual funds are more commonly known as ELSS. it is a very good investment plan for those who are risk-takers. These are open-ended funds which can be redeemed after a lock-in period of 3 years. But this is not the best part of this scheme for which people are showing interest in it. After investing in this scheme you can get tax benefit up to INR 1.5 lakh. Also, there is no investment limit in ELSS mutual fund scheme; the exemption you get is only up to rupees 1 lakh. 
Also Read:- SIP Trunk: What it is and how it works
Preferred due to the shortest Lock-in period
People today are showing more interest in investing in this mutual fund scheme because of its shortest lock-in period. When the lock-in period of this scheme is compared to the other saving investment schemes, people find it more convenient and impressive because of its three-year lock-in period. FDs is also a good investment scheme but its lock-in period is 5 years to get tax exemption. Also, these funds have long term capital gains tax exemption eligibility. Moreover, the dividend earns through this scheme is tax-free. 
Investment options
These funds come with different investment options as per the convenience of the investor. You can invest a lump sum amount or even you can also go for the systematic investment plan which is more popularly known as SIP. To gain more benefit, you are recommended to invest through the systematic investment plan. This plan has rupee cost averaging benefit over the lump sum plan. The minimum investment in this plan is only rupees 500 whereas you need to invest at least 5000 rupees in other funds. You are also available with dividend and growth options. You can select the option according to your requirement but remember once the plan is selected you cannot change it till the lock-in period. You can find out top-rated ELSS funds online and invest in it. 
Not suitable to all
Even though these funds come with a lot of tax benefits, its lock-in period is short but they are not recommended to all the investors. These funds come with high market risk. These funds are subjected to high market unpredictability. You can also suffer a loss of capital while investing in ELSS. So, it is important to check your risk profile before investing in this scheme.  
Higher Return
Generally, the investors are ready to bear all kinds of risk and this is the reason why most of them are interested in investing inequities. Though there are some risk and unpredictability associated with ELSS, you enjoy higher returns. It offers you a good return in the long term as well. 


it is always a good plan to invest in mutual funds. You can make it as your long term goal because you can earn high returns in the long run. With this kind of investment, you can buy your favorite car, diamond jewelry and even plan for your child education or marriage. 
Tip: many investors are interested in redeeming their investment due to markets poor performance at that time. But you are advised to work with patients as there can be many appreciation opportunities ahead. 

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