Most of us are looking for savings options when the taxpayer knocks on our door. Most of the time, we tend to either intentionally or unintentionally ignore ELSS. Equity Linked Savings Scheme (ELSS), a diversified tax savings pool, is a fund in which a large part of the corpus is invested in the equity markets.
Now you can start investing in ELSS schemes through the SIP channel. However, it should be noted that each investment provides for a lock-up period of 3 years from the date of the investment. ELSS funds give you two options for growth and dividend. The growth option gets you a lump sum after the lock-in period ends, while the dividend option gives you the right to a dividend whenever a fund announces a dividend, even if it is in the blocking period.
ELSS funds are becoming an increasingly popular instrument, let's find out why they could be a worthwhile investment for you.
Benefit from tax and investment savings
ELSS offers you the double advantage. Plus, due to its advantage in the market through exposure to equities, it helps multiply your money faster while keeping your taxes under control thanks to the benefits of Section 80C. Therefore, ELSS is not just a simple vanilla savings instrument unlike PPF. ELSS opens up the possibility of earning solid returns while saving your taxes.
Less downtime compared to other tax saving options
ELSS has the lowest lockout period of just three years compared to other popular instruments. These include PPF (15 years), NSC (6 years) and FD of tax savings (5 years). Therefore, ELSS enjoys the highest liquidity among other options.
Superior and tax-free returns
Of all the options available in section 80C, ELSS and PPF returns are tax exempt. Additionally, ELSS gives you the best returns simply because of its market advantage. Returns of NSC and FD are taxable. Therefore, ELSS offers you the best returns among all instruments.
Investment in OpenSup shares
You may have reservations about investing in mutual fund. Plus, if you haven't invested directly or indirectly in the stock markets, ELSS is the best way for you to start your equity journey. If you invest in the markets directly or indirectly, a slight rise or fall in the markets can trigger a bad sell decision. This is where ELSS becomes important. A 3-year lock-in period in ELSS keeps you tied and you can see clear returns over a three-year period. If you look at the past two decades, ELSS has provided the best returns compared to any other under 80C.
Hence, invest in ELSS Tax Saving Funds through SIP to save taxes and earn top returns while averaging your market risks.