Mutual funds in India are one of the best investment options available in the current market scenario. These funds work under an Asset Management Company that pool money from several investors and further invest the corpus in company stocks and bonds. Mutual funds in India are classified as Equity Funds, Debt Funds, and Hybrid or Balanced Mutual Funds. The equity-linked saving scheme in India is a tax-saving instrument that invests largely in equities and a small part in debt funds.
Those investors investing in Mutual funds in India need to know that the Equity-linked saving scheme in India (ELSS), stands a level higher than other instruments enjoying tax exemption under section 80C of the Income Tax Act. The main three reasons are – higher returns, shorter lock-in period, and tax exemption. Moreover, to invest in Equity linked saving scheme in India, you don’t need to learn about the market conditions, investing in high-return securities, or worry about your investments. All your works are carried out professionally by fund managers. Again, you don’t need to worry about investing a large sum of money at a time if you are earning low. You get the flexibility of investing through a Systematic Investment Plan or SIP. It is a monthly investment plan, where you pay a fixed amount of money every month. You can start investing with a minimum of Rs 500. Within the lock-in period, you cannot redeem your investment. As the investments are mostly on AssetClass, therefore, capital appreciates in the long run. One can invest the redeemed amount after completion of the 03 years lock-in period. Further, it is suggested to keep investing for longer periods.
The equity-linked saving scheme in India (ELSS) is divided into two broad categories – Growth Fund and Dividend Payout. Growth Fund is for the long-term investors where the fund grows significantly during the invested years. Dividend Payout can be further subdivided into Dividend Payout and Dividend Re-investment. For Dividend Payout, you get tax-free dividends whereas, in Dividend Re-investment, the amount accumulated is invested further into fresh ELSS.
Benefits of investing in ELSS funds
There are several benefits of the Equity-linked saving scheme in India that all mutual fund investors must know. It is a fund where tax saving and higher return together make you save money. Here are some of the benefits of ELSS funds.
Factors to consider before investing in ELSS
While you are opting for investing in Equity linked saving scheme in India, you must consider certain factors.
Nothing comes to us without risks. Every step of our life is full of uncertainties. So why not try investing in Mutual funds in India by taking some risks, when you get an assurance of capital appreciation? If you are in your 20’s, then this is the perfect time for you to invest. ELSS is a great option to start with. You don’t need great knowledge about the stock market, investments, and so on to invest in Mutual funds in India. You get expert support from the fund manager and all your investments are handled under professional care. Start investing with Rs 500 and keep growing with time. But remember to make an investment goal according to your income level, never burden your shoulders with loads of investment and then diversify the portfolio for earning high.
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