Want to Avail Better Returns and Save Taxes? Choose ELSS and Bolster your Mutual Fund Portfolio

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Mutual fund, a popular investment medium, is a pool of investor money that gets spread across stocks, debt, bonds, fixed income securities, etc. Fund managers appointed by the Asset Management Companies (AMCs)

Mutual fund is broadly categorized into debt, equity and balanced funds under open ended and close-ended schemes. There are many mutual funds available in the market, including Equity Linked Saving Scheme (ELSS) that puts majority of the investment in equity and equity related products. The risk element in ELSS is there. It is this attribute of ELSS that has allowed investors to reap an average return of 18% in the last three years. Plus, there are tax-saving benefits, making it even more investor-friendly. So, what are you waiting for? Invest your savings in the instrument and fetch good returns. You can also see below the details of ELSS.

Features & Benefits of ELSS

  • Even though there is no limit set for ELSS investments, you can gain tax exemption on investing in the said instrument under Section 80C of the Income Tax Act. The maximum exemption is limited to Rs 1,50,000 in a financial year. You can get tax exemption on the receipt of dividends, and long-term capital gain that gets realised on selling mutual fund units after a year of purchase. You will have to wait for three years, the stipulated lock-in period, to sell your mutual fund units via ELSS.
Top-Performing SchemesRiskometerNAV1-Year Return3-Year Return5-Year ReturnAUMAsset Allocation
DSP BlackRock Tax Saver Fund - Direct Plan-Growth
Moderately HighRs. 39.1122%27.30%N.A.Rs. 24.04 CrEquity-98.31%

Cash/Call-1.69%
Motilal Oswal MOSt Focused Long Term Fund- Regular Plan-GrowthHighRs. 13.4021.40%N.A.N.A.Rs. 112.25 CrEquity-97.13%

Cash/Call-2.87%
DSP BlackRock Tax Saver Fund-GrowthModerately HighRs. 38.4421.30%26.60%20.60%Rs. 1,169.27 CrEquity-98.31%

Cash/Call-1.69%
SBI TAX Advantage Fund - Series II-GrowthHighRs. 27.2819.50%34.20%N.A.Rs. 27.76 CrEquity-96.33

Money Market. Cash & Call-3.67%
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Note-Sourced as on Oct 14, 2016

Points to Keep in Mind

  • Stay committed for a long-term investment to get the most out of ELSS

  • Do not get distracted by the lower returns of ELSS in the short-term as the long-term investment is always beneficial

Advantages of ELSS Over Other Tax-saving Investment Products

Want to know why ELSS is better than other tax-saving investment products? Read out the comparison in the table below.

FactorsELSSNational Saving Certificate (NSCPublic Provident Fund (PPF)Tax-saving Fixed Deposit
Lock-in Period3 Years
5-10 Years15 Years5 Years
CAGR per Year18%8.5%-8.8%8.70%7.50%
TaxationTax FreeMaturity Amount TaxableTax FreeMaturity Amount Taxable

From the table, it is clear that, ELSS is the outright winner on all the counts be it the period of investment, returns or taxation.

If you are planning to create a large corpus 20 years from now, then there is no better investment medium than ELSS. So, invest in ELSS and secure your as well as your family's future.