The combination of equity and tax-saving makes ELSS funds an ideal investment for all types of investors.
There are many kinds of mutual funds and clearly, not all are suitable for every investor. However, ELSS funds are probably an exception. ELSS are probably the most popular tax-saving investments . The benefits of ELSS go far beyond just the tax you save, or even the gains you make from the fund itself.
- Tax benefit under Section 80C: It is common knowledge that investments made in ELSS are eligible for a tax deduction of up to Rs 1.5 lakh under section 80C of the Income Tax Act. This feature of the Equity Linked Savings Schemes attracts the interest of new as well as experienced investors.
- Lock-in Period: There is a mandatory lock-in period for all major tax saving investment schemes and plans. ELSS is no different. However, it has the lowest lock-in period of just 3 years. This instills discipline in new investors while giving the scheme enough time to accumulate returns.
- Equity Exposure: Many advisors recommend ELSS to first-time investors. The mandatory lock-in period helps investors to endure the volatility of the stock market. Fund managers can adopt and personalize their buy and hold strategies in order to maximize returns. You can invest in ELSS for specific long-term periods as per your financial goals. Since stocks have the potential to beat other investments over a long period, equities are considered the best options to fund long-term goals.
The combination of equity and tax-saving makes ELSS an ideal gateway to equity.
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