One of the essential parts of our financial careers falls around saving tax on our earnings. It is almost an art — choosing to invest in the right places where your investment can grow with minimum risk.
Mutual funds have emerged to be one of the most popular ways to save tax and fulfill financial goals. It can be customized as per your requirements and comes with good liquidity options. There is no upper bar on the amount of money that you can invest in, and you can begin investing with just Rs 500 per month. Your money, over time, will be compounded to offer you high returns.
ELSS stands for Equity Linked Savings Scheme — a mutual fund category that can specifically help you with saving your taxes. Investing in an ELSS fund offers two primary benefits, among others: capital appreciation, and tax-saving benefits under Section 80C of the Income Tax Act.
One of the best features of equity funds that have led to its popularity falls around tax-saving. ELSS funds come under the equity category, which implies that more than 65 percent of the funds are invested in equity. With ELSS funds, you have the option to save upto Rs 1,50,000 on taxes.
For example, let’s say that Mr. Basu is a computer engineer who has a taxable income of Rs 12 lakh per year. An annual income of Rs 12 lakh puts Mr. Basu in the tax bracket of 30 percent. Now, if he decides to invest Rs 1.5 lakh in an ELSS fund, then his taxable income will be brought down to Rs 10.5 lakh under Section 80C of the Income Tax Act.
ELSS funds also come with a good post-tax return scheme, as your long term capital gains up to 1 lakh are exempted under Section 80C, and gains that go above Rs 1 lakh are taxed at 10 percent.
You can choose between growth and dividend option while investing in ELSS, depending on your financial needs and strategy, and the kind of risk you are willing to take. With the growth option, the money in your funds is continuously reinvested, and it keeps on growing until the time you choose to redeem it. If you have opted for the dividend option, then your deposit will be paid out as dividends to you at regular intervals.
The dividends that are paid on ELSS funds come with a tax rating of 11.65 percent.
One of the most attractive features of any investment is its liquidy — how easily and how soon can the money be redeemed. ELSS funds stand out here as it has a minimum lock-in period of 3 years, unlike other investment options such as PPF and NPS, that come with a minimum lock-in period of five years.
This is a great feature if you are looking forward to investing in a plan which can be accessed easily so that you do not have to wait for long to access your money.
With such attractive features, ELSS funds come to be an imperative choice if you are looking for a safe investment option that can be accessed and liquidated with much ease, without having to wait for years end.
One of the noticeable features of investments is that it inculcates a habit of saving in us. With a low starting cap, you can get into a habit of saving money, and this is where a Systematic Investment Plan (SIP) comes handy. You can invest in ELSS funds through SIPs on Finser MARKETS, starting with just Rs 500 a month.
ELSS funds come with other attractive features that justify more reasons for investing it, and one of them happens to be the transparency of investment. For people who do not know much about the market, choosing between funds and deciding on other factors such as the investment period and the amount of money to be invested can be a complicated process.
ELSS funds come with much transparency to get rid of the complexity. You are provided with a portfolio which precisely highlights how your investment is doing in the market and how well it is attractive returns.
You also have a fund manager who is responsible for managing your funds. A fund manager, in general, is an expert who oversees the market and identifies profiting trends in it. Having a fund manager takes away the burden of having to invest all by yourself, going through all the investment choices.
ELSS funds are market-linked instruments, so they carry moderate risk with the. Much like diversified mutual funds, ELSS invests in equity shares of various companies across market capitalizations.
When you invest in ELSS funds, you should care about not investing in a new scheme year after year. Only one ELSS fund which you keep on topping up is quite enough for your investment portfolio.
You also have the option to renew your ELSS investment after your 3-year lock-in period. However, if you choose to sell them, then you can do so online with a few clicks. The funds that you will get after liquidating your fund will be credited to your bank account.
It is quite easy to invest in an ELSS fund on Finserv MARKETS. The signup process is easy and can be done on a smartphone or a computer — in a few short and easy steps. All you have to do is provide some basic details about yourself to complete the KYC process, choose the type of fund and the amount you want to invest, and then complete the payment.
Post that, you can always see how your funds are performing by checking your online portfolio. With zero hidden charges and excellent customer service, you can be assured that your funds are gaining returns in safe hands with minimum to no monitoring — an easy, effective, and lucrative way to grow your savings. Choose, Finserv MARKETS, today!