Articles

ELSS Funds-5 Reason That Makes it a Great Investment Choice

by Raghav M. Marketing

Investors are a very cautious lot who always seek to increase their earnings, while at the same time save some tax money in the process. If you are on the hunt for a scheme that can help you take down both birds with one stone, then consider investing in Equity Linked Savings Schemes. Following are five important benefits of investing in ELSS.

     Tax Savings: Investing in ELSS can get you the benefit of tax deductions. This is made possible under section 80C of the Income Tax Act, 1961. By investing in ELSS, you stand to save up to Rs. 1.5 lakhs from your yearly gross income. Further, you get the added benefits of tax-free capital gains and dividends for investments held over an extended period. If you fall under the higher end of the income tax slab, you stand to save a good amount annually by investing in ELSS.

     Optimal Lock-in Period: Most tax saving schemes require you to keep your investments locked-in for a fixed period. During this period, you are not allowed to make withdrawals from your investment corpus. Such lock-in periods usually range between three to fifteen years.

This is where ELSS scores over other tax saving schemes by having the minimum lock-in period of three years. This allows you to test the waters by investing in ELSS for a relatively short time. Then, if you feel your investments are not performing as per your expectations, you have the freedom to shift to other instruments after the lock-in period is over.

     Builds Investment Discipline: ELSS helps to build investment discipline by allowing you to invest in the schemes via SIP (Systematic Investment Plan). Under this technique, you can start investing with as little as Rs. 500 every month. This helps you to build up a habit of saving every month while ensuring you have a nest-egg to fall back on in times of need. It’s a win-win situation for you!

     Offer Healthy Returns: ELSS invests in an assortment of market-determined equities. These give you much better returns than fixed-rate investment schemes such as PPF and Fixed Deposits with banks. As ELSS is a market-linked scheme, you stand to gain more in the long run by staying invested. Also, the greater returns allow you to beat the monster of inflation and secure a better future for yourself and your loved ones.

     Potentially Infinite Investment Opportunity: Unlike other tax-saving schemes, ELSS Funds have no maturity date. This simply means you can continue to stay invested in ELSS even after the lock-in period is over, for as long as you want, and reap the benefits associated with it.

Used wisely, ELSS can prove to be a life-saver for your finances. Be advised, being a market-linked scheme, ELSS is subject to market fluctuations. For reaping the maximum gains from this instrument, consider holding your investment for the long term.


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About Raghav M. Freshman   Marketing

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Joined APSense since, April 20th, 2017, From Mumbai, India.

Created on Jun 19th 2019 01:09. Viewed 481 times.

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