Financial planning is necessary for each and every household. But to hire a financial planner is not a feasible option for everyone. To cash in on this there are various schemes helping you to take advantage of taxing savings and financial benefits? Always opt for investing in best ELSS funds as you are entitled to a tax rebate of Rs 1, 50,000 under section 80 C of the Income tax act of 1961.
Why ELSS is a popular option?
Lock in period on the lower side
As compared to the traditional investment options like PFF or Fixed deposit that are 15 and 5 years respectively with ELSS it has a lock in period of 3 years. This works out to be the lowest among the various tax saving instruments.
Investing via a SIP
For purchasing a mutual fund subscription a Systematic investment plan is the key. This means that you invest regularly and a fixed sum of money at regular intervals of time a habit of savings develops and you are not expected to be worried about market fluctuations. In addition it works out to be a viable tool for wealth creation and helps to preserve capital.
The best aspect about mutual funds is that you can start with a low amount as low as Rs 500.
With ELSS funds there is a higher level of transparency. You are aware of all transaction details taking place the details that are part of your investment portfolio.
Via the benefit of net banking you can subscribe to any mutual fund scheme online. This eradicates the hassles of too much documentation or paying a visit to the branch for small issues.
Points to consider before you are planning to invest in ELSS
Start early and do not wait for a long period
Not only for ELSS funds, is it suggested that you invest for other funds. In order to maximize returns starting early and in a regular way is the key. If you end up choosing a wrong ELSS funds, you do not have a privilege of leaving the fund for 3 years. The key is to start early and undertake a proper amount of research so that you do not commit any mistakes.
Do not judge any scheme based on its short term performance
Once again this would not only be for ELSS schemes but for any other type of mutual fund schemes. As per industry experts it is suggested that you invest in a fund which has systematically been performing for the last few years.
Returns should not be the only parameter for judging a fund
Yes returns on investment are important, but merely focussing on returns when it is an ELSS funds would not enable you to gain maximum from an ELSS funds. Lookout for an investment philosophy matching your views.
Last but not the least a lot of investors commit the mistake of withdrawing funds after a 3 year lock in period. This is a wrong approach as you should continue investing.