ELSS Investment: Less than 3 months are left for the financial year 2024-25 to end. In such a situation, if you have not yet done tax savings planning, then you can still invest for it. If you want good returns on investment along with saving tax, then Equity Linked Savings Scheme i.e. ELSS Mutual Fund can prove to be the right option. It has given a return of up to 49% in the last 1 year.
ELSS Investment: What is ELSS Mutual Fund?
ELSS i.e. Equity Linked Savings Scheme are such mutual funds in which the investors’ money gets blocked for 3 years. In this category of mutual funds, tax exemption is available on investment up to Rs 1.50 lakh under section 80C of the IT Act. However, due to being linked to the stock market, it has more risk than small savings like FD or NSC.
ELSS Investment: Compared to other tax saving schemes, it has a low lock-in period
Compared to other tax saving schemes including tax saving FD, Public Provident Fund, the lock-in period in ELSS mutual funds is very low. While in tax saving FD, the investors’ money is locked for 5 years and in Public Provident Fund for 15 years. At the same time, in ELSS mutual funds, the investors’ money remains blocked for 3 years.
However, a big advantage of keeping the money blocked is that it promotes investment by staying disciplined for a long period. This can help you in wealth creation in the future. The end of the 3-year lock-in does not mean that you will have to exit the fund, you can extend it further.
Investing through SIP is more beneficial in the long run
Like other equity funds, investing in this category of funds also proves to be more beneficial in the long run. The reason for this is that by doing SIP in equity fund for a long time, the risk of fluctuations in the stock market is reduced. An average return of the low and high levels of the stock market is generated and the benefit of compounding is also available.
Is SIP the best way of investment?
Perhaps it would not be appropriate to call it the best way of investment, but it can definitely be a good way of investment for people with regular income like salaried and businessmen who have a fixed income every month. Investment through SIP does not put a strain on the pocket and by continuously investing small amounts, a good amount can be collected in the long run.
