When it comes to money saving,
tax saving investment schemes helps a lot in saving as much as possible. Tax
planning is very important while deciding your monthly and annual house budget.
If you are earning a taxable amount then you can take benefit of sec 80 C of
the Income Tax Act which allows some tax relief if you invest into certain
investment schemes. Best Taxsaving mutual funds or Equity Linked Saving Scheme (ELSS) is one of the popular
investment schemes to yield the tax deductions.
What is tax saving
mutual fund or ELSS?
Features of ELSS
·
It is a diversified equity mutual fund means
your money will be invested in different government securities, bonds and stock
but majority of the capital goes to equities. The maturity amount will reflect
the returns from the equity markets.
·
It has a lock in period of 3 years from the date
of investment.
·
One can exit ELSS by selling it after the lock
in period (i.e. 3 years)
·
It has both dividend and growth options
·
Investors get a lump sum amount when lock in period
is over in the growth scheme
·
In dividend scheme, investor get a regular
income whenever dividend is declared even during the lock in period.
·
Returns from this scheme is tax free and you can
claim up to 1 lakh of this investment as a deduction from your total taxable
income in financial year under the Sec 80C of IT Act.
What to look for in an ELSS fund?
Since this is an equity mutual
fund therefore you should do a thorough research before investing in any such
fund. Here are some important things you should focus on:
·
Long term performance of the fund in market
·
Essential fund details like
§
Investment approach of the fund manager
§
Portfolio of the fund
§
Fund's expense ration
§
Volatility history of the fund
Benefits of ELSS as compared to other tax saving approaches (PPF, FDs,
NSC)
§ small
lock in period
§ gives
you better returns
§ offers
you an option of investing in SIP
Shortcomings of ELSS
§ Subjected
to market risk
§ Can't
withdraw the money before maturity date
If you are ready for investment
and seeking more details along with financial expert's comments then visit
fundsindia.com to see the list of top Indian mutual funds and the related information.
Invest smart and stay happy!!
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