New Delhi8 hours ago
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There are less than 3 months left for the end of the financial year 2024-25. In such a situation, if you have not done tax savings planning yet, 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 returns of up to 49% in the last 1 year.
What is ELSS Mutual Fund? ELSS i.e. Equity Linked Savings Scheme are such mutual funds in which investors' money is 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, being share market linked, it carries more risk than small savings like FD or NSC.
It has less lock-in period as compared to other tax saving schemes. The lock-in period in ELSS mutual funds is much less as compared to other tax saving schemes including tax saving FD, Public Provident Fund. Where investors' money remains locked in tax saving FD for 5 years and in Public Provident Fund for 15 years. Whereas in ELSS mutual funds, investors' money remains blocked for 3 years.
However, a major advantage of having money blocked is that it promotes disciplined investment over the long term. This can further help you in wealth creation. The expiry of the 3-year lock-in does not mean that you will have to exit the fund, you can extend it further.
More benefits by investing through SIP 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 doing SIP in equity funds for a long time reduces the risk of fluctuations in the stock market. The lows and highs of the stock market create an average return and also get the benefit of compounding.
Is SIP the best way to invest? 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 people and businessmen who have a fixed income every month. Investing through SIP does not put a heavy burden on the pocket and by continuously investing small amounts, a good amount can be accumulated in the long run.
