EQUITY LINKED SAVING SCHEME (ELSS) Fund 

An ELSS is a diversified equity mutual fund which has more than 65-100% of the corpus invested in equities.

Since it is an equity fund, returns from an ELSS fund reflect returns from the equity markets. 

By investing in an ELSS Funds, investor can enjoy both the benefits of capital appreciation, as well as tax benefits.

This type of mutual fund has a lock in period of 3 years from the date of investment. This means if you start a Systematic Investment Plan in an ELSS, then each of your investments will be locked in for 3 years from the respective investment date. Investors can exit ELSS by selling it after 3 years.

Advantages of an ELSS Fund

Tax Savings

Amount invested in an ELSS fund is available for a tax deduction to the extent of Rs 150,000 in a financial year under section 80C of the Income Tax Act.

This is the only investment option which allows investors to save on tax while earning high returns from investment in equity funds.

Lowest lock–in period among available tax saving options

ELSS has a lock-in period of only 3 years, as compared to minimum 5 years for other tax saving options.

This period is the lowest in comparison to other tax saving options such as 15 years in a PPF or 5 years in a Fixed Deposit option.

Thereby ELSS has potential to generate higher returns with the lowest lock-in period.

Lower Tax on Gains

An ELSS fund has to be invested for a minimum period of 3 years.

Any gains from the sale of ELSS funds are therefore treated as long-term gain as per income tax laws. 

According to the present law, gains above Rs 1.0 Lakhs shall be taxable at the rate of 10%. In contrast, short-term capital gains are taxed at the rate of 15%. Thus, ELSS funds entail lower tax expense automatically.

The Benefit of Compounding

It is generally advised to invest in equity funds for a long time horizon spanning more than 5 years.

ELSS funds by virtue of the lock-in period bring about a disciplined long-term investment by default. In this process, it helps the investors benefit from the power of compounding in the long-run.

Redemption not Compulsory After 3 Years 

In ELSS Funds, Redemption is not compulsory after a period of 3 years. It is only minimum investment duration.

There is no maximum investment duration.

ELSS should not be treated only for tax saving purpose but should be invested for tax saving as well as mode of wealth generation. ELSS funds can generate much superior returns than other tax saving options and therefore should be invested for long term financial goals.

Higher Returns

Since ELSS funds invest in equity, the returns are higher (15-20%) compared to other tax saving options (generally, 7-10%).

Over a 3 year period, the benefit of compounding coupled with returns from equity provides higher returns for investors.

ELSS provides returns in the range of 15-20% generally. This is highest among other tax saving options such as PPF, FD over 5 years, among others.

SIP Option Available

While investing in ELSS, investors may choose to go with the SIP option or Lum Sump option.

SIP allows the investor to invest a fixed sum from their savings periodically, generally each month.

SIP is has many inherent advantages and it is recommended to invest in ELSS funds through SIP Mode.

Safe, Easy and transparent 

Investing in mutual funds is very transparent and very easy.

All mutual funds companies come under the purview of SEBI and they need to make necessary disclosures.

Comparing ELSS with other Tax saving options

FUNDS MASTERS RECOMMENDATION

Insurance is not to be treated as investment. Do not purchase any insurance policy just to save tax.

First evaluate your insurance requirement and then take Term insurance only. Insurance amount should be sufficient to maintain same life style in case of death of earning member of family.

ELSS is proven best tax saving instrument and has many advantages over other tax saving options available.

Do not plan for your taxes at the last moment. Always plan your tax saving at the start of financial year.

Invest through SIP mode in ELSS funds for long term not just for period of 3 years.

Long term investment in ELSS funds may prove to be very rewarding and have potential to create huge wealth in comparison to other tax saving options.

Link your tax saving to your long term Goals such as Child Education, Retirement planning, Construction of House etc.

Wish you peaceful & rewarding wealth creation experience through ELSS Funds.

Funds Masters Recommended Best Equity Funds For Year 2019

When it comes to investing in mutual funds, everyone else tells you what to do and gives you checklists. Funds Masters thinks about everything and automates it for you.

Choosing the right funds from over 8,000+ funds is complicated. We do this for you through a disciplined investment process. We pick funds with care and without bias. We monitor and review our selection periodically.

It’s proven by behavioral finance experts that fewer scientific choices lead to better decisions. Your portfolio should not have too many or too few funds. Generally 3-5 funds are sufficient for all your financial needs. You need different types of funds for different goals. Equity, Debt and Tax saving.

The Following ELSS Mutual funds are hand Picket funds for your long term wealth creation and specially for investing in year 2019.