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Why ELSS Over Other Tax Saving Investments

Updated on September 18, 2023 , 1485 views

ELSS funds also known as Equity Linked Savings Scheme is an equity-diversified tax saving Mutual Fund that majorly invests its assets in equities or equity-linked instruments like stock markets. The ELSS Mutual Funds offer Market-linked returns, which are volatile and are dependent on the market conditions. However, financial advisors suggest Investing in ELSS funds for a long duration, as these ELSS Mutual funds generate best returns when invested for a longer duration. In the recent reports, it was seen that ELSS funds generated around 20%-30% returns when invested for 3 years, which is much more than the returns generated by other Mutual Funds.

ELSS

Comparison Of ELSS & Other Tax Saving Investment Options

The comparison of ELSS and other tax saving is based on parameters like tenure, returns, eligibility for Deduction under 80c, etc.

Let's have a look:

Parameter PPF NSC FD ELSS
Tenure 15 years 6 years 5 Years 3 years
Returns 7.60 % (Compounded Annually) 7.60 % (Compounded Annually) 7.00 - 8.00 % (Compounded Annually) No Assured Divividend / Return as it market linked
Min. Investment Rs. 500 Rs. 100 Rs. 1000 Rs. 500
Max. Investment Rs. 1.5 Lakhs No Upper Limit No Upper Limit No Upper Limit
Amount Eligible for Deduction under 80c Rs. 1.5 Lakhs Rs. 1.5 Lakhs Rs. 1.5 Lakhs Rs. 1.5 Lakhs
Taxation for Interest/return Tax-Free Interest Taxable Interest Taxable Gains up to Rs 1 lakh are free of tax. Tax at 10% applies to gains above Rs 1 lakh
Safety/Ratings Safe Safe Safe Risk

Top 5 ELSS Funds To Invest In 2023

Below is the list of Fund having Net Assets/AUM between 100 - 200 Crores.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2022 (%)
Mahindra Mutual Fund Kar Bachat Yojana Growth ₹21.6743
↑ 0.07
₹6499.614.414.924.512.62
BOI AXA Tax Advantage Fund Growth ₹113.96
↑ 0.25
₹84110.617.319.124.214.8-1.3
PGIM India Tax Savings Fund Growth ₹27.17
↑ 0.10
₹5577.112.615.223.713.34.7
Principal Tax Savings Fund Growth ₹379.456
↑ 0.41
₹1,0901014.914.82311.84.3
Sundaram Diversified Equity Fund Growth ₹171.133
↑ 0.26
₹1,6848.613.71422.29.94
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 22 Aug 23

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1. Mahindra Mutual Fund Kar Bachat Yojana

The investment objective of the Scheme is to generate long-term capital appreciation through a diversified portfolio of equity and equity related securities. The Scheme does not guarantee or assure any returns.

Mahindra Mutual Fund Kar Bachat Yojana is a Equity - ELSS fund was launched on 18 Oct 16. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 11.9% since its launch.  Return for 2022 was 2% , 2021 was 39.4% and 2020 was 14.1% .

Below is the key information for Mahindra Mutual Fund Kar Bachat Yojana

Mahindra Mutual Fund Kar Bachat Yojana
Growth
Launch Date 18 Oct 16
NAV (22 Aug 23) ₹21.6743 ↑ 0.07   (0.33 %)
Net Assets (Cr) ₹649 on 31 Jul 23
Category Equity - ELSS
AMC Mahindra Asset Management Company Pvt. Ltd.
Rating Not Rated
Risk Moderately High
Expense Ratio 2.48
Sharpe Ratio 1.02
Information Ratio 0.4
Alpha Ratio 1.89
Min Investment 500
Min SIP Investment 500
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
31 Aug 18₹10,000
31 Aug 19₹8,870
31 Aug 20₹9,234
31 Aug 21₹15,052
31 Aug 22₹15,847
31 Aug 23₹18,058

Mahindra Mutual Fund Kar Bachat Yojana SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹415,684.
Net Profit of ₹115,684
Invest Now

Returns for Mahindra Mutual Fund Kar Bachat Yojana

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 22 Aug 23

DurationReturns
1 Month 0.4%
3 Month 9.6%
6 Month 14.4%
1 Year 14.9%
3 Year 24.5%
5 Year 12.6%
10 Year
15 Year
Since launch 11.9%
Historical performance (Yearly) on absolute basis
YearReturns
2022 2%
2021 39.4%
2020 14.1%
2019 4.5%
2018 -9.8%
2017 24.8%
2016
2015
2014
2013
Fund Manager information for Mahindra Mutual Fund Kar Bachat Yojana
NameSinceTenure
Manish Lodha21 Dec 202.7 Yr.
Fatema Pacha16 Oct 202.88 Yr.

Data below for Mahindra Mutual Fund Kar Bachat Yojana as on 31 Jul 23

Equity Sector Allocation
SectorValue
Financial Services31.37%
Consumer Cyclical14.18%
Technology12.29%
Industrials11.37%
Basic Materials11.11%
Consumer Defensive5.13%
Energy4.92%
Health Care3.73%
Utility2.14%
Real Estate1.59%
Asset Allocation
Asset ClassValue
Cash2.17%
Equity97.83%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Dec 16 | HDFCBANK
8%₹55 Cr349,876
ICICI Bank Ltd (Financial Services)
Equity, Since 31 May 19 | ICICIBANK
8%₹50 Cr519,620
↑ 45,500
Infosys Ltd (Technology)
Equity, Since 29 Feb 20 | INFY
5%₹35 Cr243,807
Reliance Industries Ltd (Energy)
Equity, Since 31 Mar 18 | RELIANCE
5%₹32 Cr134,154
Axis Bank Ltd (Financial Services)
Equity, Since 31 Jan 21 | 532215
4%₹28 Cr289,631
Tata Consultancy Services Ltd Shs Dematerialised (Technology)
Equity, Since 31 May 19 | TCS
3%₹22 Cr65,286
↑ 6,000
Bajaj Finance Ltd (Financial Services)
Equity, Since 30 Nov 21 | 500034
3%₹20 Cr27,900
↑ 2,000
Maruti Suzuki India Ltd (Consumer Cyclical)
Equity, Since 28 Feb 18 | MARUTI
3%₹17 Cr17,376
Larsen & Toubro Ltd (Industrials)
Equity, Since 31 Aug 18 | LT
3%₹17 Cr63,071
NTPC Ltd Shs Dematerialised (Utilities)
Equity, Since 28 Feb 21 | 532555
2%₹14 Cr636,000

2. BOI AXA Tax Advantage Fund

The Scheme seeks to generate long-term capital growth from a diversified portfolio of predominantly equity and equity-related securities across all market capitalisations. The Scheme is in the nature of diversified multi-cap fund. The Scheme is not providing any assured or guaranteed returns.(There can be no assurance that the investment objectives of the Scheme will be realized.)

BOI AXA Tax Advantage Fund is a Equity - ELSS fund was launched on 25 Feb 09. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 18.3% since its launch.  Ranked 13 in ELSS category.  Return for 2022 was -1.3% , 2021 was 41.5% and 2020 was 31.2% .

Below is the key information for BOI AXA Tax Advantage Fund

BOI AXA Tax Advantage Fund
Growth
Launch Date 25 Feb 09
NAV (22 Aug 23) ₹113.96 ↑ 0.25   (0.22 %)
Net Assets (Cr) ₹841 on 31 Jul 23
Category Equity - ELSS
AMC BOI AXA Investment Mngrs Private Ltd
Rating
Risk Moderately High
Expense Ratio 2.49
Sharpe Ratio 1.32
Information Ratio 0.33
Alpha Ratio 5.62
Min Investment 500
Min SIP Investment 500
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
31 Aug 18₹10,000
31 Aug 19₹8,612
31 Aug 20₹10,360
31 Aug 21₹17,548
31 Aug 22₹17,437
31 Aug 23₹20,231

BOI AXA Tax Advantage Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹436,710.
Net Profit of ₹136,710
Invest Now

Returns for BOI AXA Tax Advantage Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 22 Aug 23

DurationReturns
1 Month 1.8%
3 Month 10.6%
6 Month 17.3%
1 Year 19.1%
3 Year 24.2%
5 Year 14.8%
10 Year
15 Year
Since launch 18.3%
Historical performance (Yearly) on absolute basis
YearReturns
2022 -1.3%
2021 41.5%
2020 31.2%
2019 14.6%
2018 -16.3%
2017 57.7%
2016 -1.2%
2015 2.1%
2014 44%
2013 9.1%
Fund Manager information for BOI AXA Tax Advantage Fund
NameSinceTenure
Alok Singh27 Apr 221.35 Yr.

Data below for BOI AXA Tax Advantage Fund as on 31 Jul 23

Equity Sector Allocation
SectorValue
Financial Services34.39%
Industrials13.46%
Basic Materials9.36%
Consumer Cyclical8.78%
Consumer Defensive8.62%
Health Care8.02%
Utility5.61%
Technology4.23%
Energy3.57%
Real Estate3.23%
Asset Allocation
Asset ClassValue
Cash0.66%
Equity99.28%
Debt0.06%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
State Bank of India (Financial Services)
Equity, Since 31 Oct 21 | SBIN
5%₹42 Cr740,000
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Dec 10 | HDFCBANK
5%₹41 Cr264,000
↓ -62,000
Bank of Baroda (Financial Services)
Equity, Since 31 Oct 22 | 532134
4%₹31 Cr1,650,000
↑ 525,000
Power Finance Corp Ltd (Financial Services)
Equity, Since 31 Mar 23 | 532810
3%₹29 Cr1,110,000
Canara Bank (Financial Services)
Equity, Since 31 Aug 22 | 532483
3%₹29 Cr895,000
NTPC Ltd Shs Dematerialised (Utilities)
Equity, Since 30 Apr 22 | 532555
3%₹28 Cr1,260,000
ICICI Bank Ltd (Financial Services)
Equity, Since 31 Oct 18 | ICICIBANK
3%₹25 Cr260,000
↓ -65,000
Union Bank of India (Financial Services)
Equity, Since 31 Dec 22 | UNIONBANK
3%₹23 Cr2,725,875
↑ 1,135,875
Sun Pharmaceuticals Industries Ltd (Healthcare)
Equity, Since 30 Jun 22 | SUNPHARMA
3%₹22 Cr201,000
↑ 24,000
Reliance Industries Ltd (Energy)
Equity, Since 30 Nov 18 | RELIANCE
3%₹22 Cr91,009

3. PGIM India Tax Savings Fund

"The primary objective of the Scheme is to generate long-term capital appreciation by predominantly investing in equity & equity related instruments and to enable eligible investors to avail deduction from total income, as permitted under the Income Tax Act, 1961 as amended from time to time. However, there is no assurance that the investment objective shall be realize"

PGIM India Tax Savings Fund is a Equity - ELSS fund was launched on 11 Dec 15. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 13.9% since its launch.  Return for 2022 was 4.7% , 2021 was 37.5% and 2020 was 17.9% .

Below is the key information for PGIM India Tax Savings Fund

PGIM India Tax Savings Fund
Growth
Launch Date 11 Dec 15
NAV (22 Aug 23) ₹27.17 ↑ 0.10   (0.37 %)
Net Assets (Cr) ₹557 on 31 Jul 23
Category Equity - ELSS
AMC Pramerica Asset Managers Private Limited
Rating Not Rated
Risk Moderately High
Expense Ratio 2.52
Sharpe Ratio 1.1
Information Ratio 0.14
Alpha Ratio 2.51
Min Investment 500
Min SIP Investment 500
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
31 Aug 18₹10,000
31 Aug 19₹9,313
31 Aug 20₹9,633
31 Aug 21₹15,231
31 Aug 22₹16,354
31 Aug 23₹18,483

PGIM India Tax Savings Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹426,080.
Net Profit of ₹126,080
Invest Now

Returns for PGIM India Tax Savings Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 22 Aug 23

DurationReturns
1 Month -0.8%
3 Month 7.1%
6 Month 12.6%
1 Year 15.2%
3 Year 23.7%
5 Year 13.3%
10 Year
15 Year
Since launch 13.9%
Historical performance (Yearly) on absolute basis
YearReturns
2022 4.7%
2021 37.5%
2020 17.9%
2019 8.2%
2018 -6.4%
2017 39.3%
2016 1.7%
2015
2014
2013
Fund Manager information for PGIM India Tax Savings Fund
NameSinceTenure
Bhupesh Kalyani1 Apr 230.42 Yr.
Vinay Paharia1 Apr 230.42 Yr.
Anandha Padmanabhan Anjeneyan1 Apr 230.42 Yr.
Ojasvi Khicha1 Apr 230.42 Yr.

Data below for PGIM India Tax Savings Fund as on 31 Jul 23

Equity Sector Allocation
SectorValue
Financial Services32.38%
Consumer Cyclical10.92%
Consumer Defensive8.68%
Technology8.34%
Industrials7.4%
Basic Materials7.16%
Health Care6.93%
Energy6.62%
Utility3.13%
Communication Services2.01%
Real Estate0.84%
Asset Allocation
Asset ClassValue
Cash4.74%
Equity95.09%
Debt0.17%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Dec 15 | HDFCBANK
8%₹45 Cr274,264
↑ 86,772
ICICI Bank Ltd (Financial Services)
Equity, Since 31 Jan 16 | ICICIBANK
7%₹41 Cr411,594
↑ 57,500
Reliance Industries Ltd (Energy)
Equity, Since 31 Aug 17 | RELIANCE
7%₹37 Cr144,750
Infosys Ltd (Technology)
Equity, Since 31 Dec 15 | INFY
5%₹27 Cr198,329
↑ 37,200
Axis Bank Ltd (Financial Services)
Equity, Since 30 Nov 21 | 532215
4%₹21 Cr218,000
ITC Ltd Shs Dematerialised (Consumer Defensive)
Equity, Since 31 Aug 17 | ITC
3%₹19 Cr400,000
Kotak Mahindra Bank Ltd (Financial Services)
Equity, Since 30 Jun 23 | KOTAKBANK
3%₹16 Cr84,000
Larsen & Toubro Ltd (Industrials)
Equity, Since 30 Sep 17 | LT
3%₹14 Cr52,664
↓ -43,000
Torrent Pharmaceuticals Ltd (Healthcare)
Equity, Since 30 Apr 23 | TORNTPHARM
2%₹12 Cr60,976
Equitas Small Finance Bank Ltd Ordinary Shares (Financial Services)
Equity, Since 30 Apr 22 | EQUITASBNK
2%₹12 Cr1,262,500

4. Principal Tax Savings Fund

To build a high quality growth-oriented portfolio to provide long-term capital gains to the investors, the scheme aims at providing returns through capital appreciation.

Principal Tax Savings Fund is a Equity - ELSS fund was launched on 31 Mar 96. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 15.9% since its launch.  Ranked 8 in ELSS category.  Return for 2022 was 4.3% , 2021 was 32.1% and 2020 was 18.9% .

Below is the key information for Principal Tax Savings Fund

Principal Tax Savings Fund
Growth
Launch Date 31 Mar 96
NAV (22 Aug 23) ₹379.456 ↑ 0.41   (0.11 %)
Net Assets (Cr) ₹1,090 on 31 Jul 23
Category Equity - ELSS
AMC Principal Pnb Asset Mgmt. Co. Priv. Ltd.
Rating
Risk Moderately High
Expense Ratio 2.36
Sharpe Ratio 0.97
Information Ratio 0.1
Alpha Ratio 1.47
Min Investment 500
Min SIP Investment 500
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
31 Aug 18₹10,000
31 Aug 19₹8,643
31 Aug 20₹9,119
31 Aug 21₹14,128
31 Aug 22₹15,360
31 Aug 23₹17,234

Principal Tax Savings Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹405,518.
Net Profit of ₹105,518
Invest Now

Returns for Principal Tax Savings Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 22 Aug 23

DurationReturns
1 Month 0.2%
3 Month 10%
6 Month 14.9%
1 Year 14.8%
3 Year 23%
5 Year 11.8%
10 Year
15 Year
Since launch 15.9%
Historical performance (Yearly) on absolute basis
YearReturns
2022 4.3%
2021 32.1%
2020 18.9%
2019 2.5%
2018 -9.2%
2017 48.8%
2016 6.2%
2015 2.7%
2014 49.4%
2013 8.5%
Fund Manager information for Principal Tax Savings Fund
NameSinceTenure
Sudhir Kedia29 Oct 193.84 Yr.
Rohit Seksaria1 Jan 221.67 Yr.

Data below for Principal Tax Savings Fund as on 31 Jul 23

Equity Sector Allocation
SectorValue
Financial Services34.66%
Industrials11.55%
Consumer Cyclical11.04%
Technology9.77%
Consumer Defensive9.04%
Health Care7.04%
Energy6.08%
Basic Materials4.08%
Communication Services2.6%
Real Estate0.48%
Asset Allocation
Asset ClassValue
Cash3.65%
Equity96.35%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Jul 09 | HDFCBANK
9%₹95 Cr606,077
Reliance Industries Ltd (Energy)
Equity, Since 31 Dec 21 | RELIANCE
6%₹66 Cr274,000
ICICI Bank Ltd (Financial Services)
Equity, Since 31 Oct 09 | ICICIBANK
6%₹63 Cr661,000
Infosys Ltd (Technology)
Equity, Since 31 Jan 09 | INFY
4%₹48 Cr333,000
State Bank of India (Financial Services)
Equity, Since 30 Apr 05 | SBIN
4%₹46 Cr823,000
Polycab India Ltd (Industrials)
Equity, Since 30 Nov 20 | POLYCAB
3%₹34 Cr67,000
Axis Bank Ltd (Financial Services)
Equity, Since 30 Sep 17 | 532215
3%₹30 Cr311,000
Sun Pharmaceuticals Industries Ltd (Healthcare)
Equity, Since 31 Aug 15 | SUNPHARMA
2%₹26 Cr233,000
Hindustan Unilever Ltd (Consumer Defensive)
Equity, Since 30 Apr 20 | HINDUNILVR
2%₹24 Cr95,000
Tata Consultancy Services Ltd Shs Dematerialised (Technology)
Equity, Since 30 Apr 14 | TCS
2%₹21 Cr62,000

5. Sundaram Diversified Equity Fund

To achieve capital appreciation by investing predominantly in equities and equity-related instruments. A three-year lock-in period shall apply in line with the regulation for ELSS schemes.

Sundaram Diversified Equity Fund is a Equity - ELSS fund was launched on 22 Nov 99. It is a fund with Moderately High risk and has given a CAGR/Annualized return of 16% since its launch.  Ranked 14 in ELSS category.  Return for 2022 was 4% , 2021 was 31.5% and 2020 was 9.9% .

Below is the key information for Sundaram Diversified Equity Fund

Sundaram Diversified Equity Fund
Growth
Launch Date 22 Nov 99
NAV (22 Aug 23) ₹171.133 ↑ 0.26   (0.15 %)
Net Assets (Cr) ₹1,684 on 31 Jul 23
Category Equity - ELSS
AMC Sundaram Asset Management Company Ltd
Rating
Risk Moderately High
Expense Ratio 2.13
Sharpe Ratio 0.97
Information Ratio -0.13
Alpha Ratio 1.43
Min Investment 500
Min SIP Investment 250
Exit Load NIL

Growth of 10,000 investment over the years.

DateValue
31 Aug 18₹10,000
31 Aug 19₹8,774
31 Aug 20₹8,700
31 Aug 21₹13,529
31 Aug 22₹14,458
31 Aug 23₹16,052

Sundaram Diversified Equity Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹300,000
expected amount after 5 Years is ₹385,859.
Net Profit of ₹85,859
Invest Now

Returns for Sundaram Diversified Equity Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 22 Aug 23

DurationReturns
1 Month -0.3%
3 Month 8.6%
6 Month 13.7%
1 Year 14%
3 Year 22.2%
5 Year 9.9%
10 Year
15 Year
Since launch 16%
Historical performance (Yearly) on absolute basis
YearReturns
2022 4%
2021 31.5%
2020 9.9%
2019 6.2%
2018 -10.6%
2017 38.4%
2016 6.8%
2015 3.1%
2014 45.7%
2013 1.4%
Fund Manager information for Sundaram Diversified Equity Fund
NameSinceTenure
Sudhir Kedia1 Jan 221.67 Yr.
Rohit Seksaria24 Feb 212.52 Yr.

Data below for Sundaram Diversified Equity Fund as on 31 Jul 23

Equity Sector Allocation
SectorValue
Financial Services35.9%
Industrials13.08%
Technology11.22%
Consumer Defensive9.38%
Consumer Cyclical8.6%
Energy6.76%
Basic Materials5.31%
Health Care5.28%
Communication Services3.38%
Real Estate0.46%
Asset Allocation
Asset ClassValue
Cash0.64%
Equity99.36%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
HDFC Bank Ltd (Financial Services)
Equity, Since 31 Mar 13 | HDFCBANK
9%₹152 Cr968,960
ICICI Bank Ltd (Financial Services)
Equity, Since 30 Nov 11 | ICICIBANK
7%₹113 Cr1,178,000
Reliance Industries Ltd (Energy)
Equity, Since 30 Apr 12 | RELIANCE
7%₹111 Cr460,000
Infosys Ltd (Technology)
Equity, Since 30 Nov 16 | INFY
5%₹82 Cr570,000
State Bank of India (Financial Services)
Equity, Since 31 Aug 20 | SBIN
4%₹67 Cr1,199,000
Polycab India Ltd (Industrials)
Equity, Since 31 Jan 22 | POLYCAB
4%₹59 Cr116,000
Axis Bank Ltd (Financial Services)
Equity, Since 31 May 18 | 532215
3%₹47 Cr483,000
Larsen & Toubro Ltd (Industrials)
Equity, Since 31 May 18 | LT
3%₹43 Cr160,000
Sun Pharmaceuticals Industries Ltd (Healthcare)
Equity, Since 31 May 20 | SUNPHARMA
3%₹43 Cr388,000
ICRA Ltd (Financial Services)
Equity, Since 31 Jan 22 | ICRA
2%₹39 Cr67,000

How ELSS Better Than Other Tax Saving Investments?

There are various Tax Saving Investment options in India among which ELSS is one of the best options. How? Here are some of the reasons mentioned.

High Returns over Long-Term

The ELSS funds allocate the highest number of assets in stock market among other tax saving investments. So, these funds earn best Inflation-beating returns amongst all. If invested for a longer duration, the rate of returns of ELSS can easily beat the returns of other traditional debt-oriented investments. Therefore, ELSS Mutual funds provide investors with the best of both worlds- high returns and tax benefits.

Shortest Lock-in Period

The ELSS Mutual Funds have a short lock-in period as compared to the traditional tax saving investment options. The lock-in period of ELSS funds is 3 years while that of PPF is 15 years and of NPS is until retirement. So, by investing in ELSS your money does not get locked for a longer duration and you can stop investing soon after the lock-in is over.

Highly Flexible Investment

The flexibility of ELSS Mutual Funds is much more than all other tax saving investments. Unlike traditional investments, there is no need of investing in only one type of option. ELSS funds enable you to diversify your Portfolio with different kinds of investments. Also, the investors can remain invested in these funds even after the lock-in period is over. So, once the lock-in is over, you can easily choose to remain invested or redeem as per your convenience.

Conclusion

In conclusion, here are a few tips for investors investing in ELSS Funds.

  • Start investing in ELSS early
  • Invest within your limits
  • Do not choose dividend reinvestment
  • Redeem slowly and gradually
  • Invest via a SIP
Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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