ELSS or Equity Linked Savings Scheme is also called First Mutual Fund Scheme. Because most investors like to invest in mutual funds only under ELSS.
You can decrease your tax deduction by investing in ELSS, under Section 80C of the Income Tax Section, up to 1.5 lakh rupees annually. It has been observed that many investors start investing in ELSS so that they can save tax and then gradually they start to participate in other mutual funds and equity schemes.
If you are still thinking that ELSS is better for your tax saving or other government schemes, then my today’s article may prove beneficial for you because I am going to discuss this topic today.
If you are not investing in ELSS for tax saving then you should consider it again on your decision. Look for tax saving, many options are available such as public provident fund (PPF), National Saving Certificate (NSC), etc., where you will definitely get assured returns.
Also Read: Tax saving options
But when you compare ELSS with the other tax-saving scheme offered by the government, you will find that there is a lock-in period of 3 years in ELSS. whereas the other government schemes like PPF and NSC there is at least 5 years of the lock-in period.
Returns of the money invested in ELSS are very good when compared to any other tax-saving scheme proposed by the Government. I would like to say that in order to meet your long-term financial goal government tax saving schemes will fail, while ELSS is better and gives you handsome returns to reach your financial goals.
Yes, it is a different thing that investing in ELSS can be a little risky compared to tax-saving schemes operated by other governments because ELSS invests in the stock market, which is risky for a short time. Therefore, to invest in ELSS, you should make your mind for long-term investment, for example from 5 to 7 years. So that you will earn better returns in the ELSS.
It is supposed that ELSS has a risk, but you get a reward for taking risks. For instance, those who invest in ELSS in the last few years have been given tax-free returns of about 13.52 percent in three years and 17.29 percent in 5 years, and 9.83 percent in ten years. Which is much more than other government schemes.
Also Read: How to Invest in Mutual Fund
If you are having your interest in investing in ELSS then here are some of the following schemes which have given good returns in the last few years.
- L&T Tax Advantage Fund
- Aditya Birla Sun Life Tax Relief 96
- DSP Black Rock Tax Saver Fund
If you want to invest in these ELSS Schemes, then I will suggest that you should invest under a Systematic Investment Plan (SIP) and invest for a minimum period of 5 years, or else the best option will be that you should invest in ELSS for the long term financial goal. So that returns will also be a better amount and risk will be significantly reduced. Last but not the least, invest in the market after reading and understanding all the risks involved.