{"id":4438,"date":"2019-01-09T09:00:22","date_gmt":"2019-01-09T03:30:22","guid":{"rendered":"http:\/\/capitalante.com\/?p=4438"},"modified":"2020-12-29T23:36:41","modified_gmt":"2020-12-29T18:06:41","slug":"best-elss-funds-to-invest-in-india","status":"publish","type":"post","link":"https:\/\/capitalante.com\/best-elss-funds-to-invest-in-india\/","title":{"rendered":"Top 5 Best ELSS funds to invest in India 2021"},"content":{"rendered":"
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Today there are many investment plans available before investors for tax savings instruments. These plans offer a variety of investment options that can fulfill all their investment criteria such as high returns, low risk, maintaining liquidity of portfolio, and advantage of tax saving. Public Provident Fund (PPF), NPS, NSC, ELSS Mutual Fund are the popular tax saving investment options. In this column we will discuss what is ELSS, why Invest in ELSS and the best ELSS funds to invest in India.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n Equity Linked Saving Scheme (ELSS) is a kind of mutual fund offered by several Mutual Fund houses. In this scheme, your money is invested in several companies just like normal mutual fund schemes. It allows investors to save taxes up to Rs 1.5 lakh under Section 80C of the income tax act, 1961. It has a lock-in period of 3 years. You are free to invest either by giving a lump sum amount at once or make investment via the SIP route. In the case of ELSS, an investor can stop contribution but cannot withdraw wholly or partially of his total investment before 3 years from the date of the first contribution.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\n Most investment options available under Section 80C like Public Provident Fund, National Savings Certificate, etc. are government-backed investment options. These schemes typically offer modest returns of 7-8% per annum as these schemes invest the money in Debt instruments, Bonds, and Government securities. That means investors would find it difficult to create wealth after beating the inflation with these investments as the inflation rate is 7%. It is important to beat inflation to create wealth for long-term goals. On the other hand, ELSS Invests the maximum amount of money in equities. It has given around 15-16% return over the past 10 years.<\/span><\/p>\r\n An ELSS invests mostly in stocks. It is a well-accepted fact that equity has the potential to generate superior returns than other asset classes over a long period. Many studies and records justify this claim. So, if you want inflation-beating, better post-tax returns, you should invest money in ELSS funds.<\/span><\/p>\r\n Suppose you start investing with Rs. 1000\/- per month in ELSS Mutual Fund, after 15 years your absolute return will be\u00a0Rs. 6,17,355\/- assuming 15% CAGR.<\/span><\/p>\r\n ELSS has the shortest lock-in period among the investment options available like PPF, NSC, etc. under Section 80C of the income tax act, 1961. An ELSS has a mandatory lock-in period of three years. It has a plus point that investment can be stopped even after one month. But one can withdraw money partially or wholly after the completion of 3 years Lock-in-period.<\/span><\/p>\r\n ELSS funds curb the volatility associated with the stock market. Many retail investors get panic when they see their investments losing value significantly. But after a certain period market recovers its loss and yields a significant return. As the ELSS scheme has a mandatory lock-in period of three years a market can never be downward for three years. It will definitely go upward and offer a superior return\u00a0in the long term.<\/span><\/p>\r\n Let\u2019s understand this by comparison of return between ELSS and other options like PPF, NSC, etc. with the following graph.<\/span><\/p>\r\n \r\n\r\n<\/span><\/p>\r\nWhat is ELSS?<\/strong><\/span><\/h4>\r\n
Why ELSS?<\/strong><\/span><\/h4>\r\n
One: To beat the inflation<\/strong><\/span><\/h3>\r\n
Two: Better Growth potential over a long-term horizon<\/strong><\/span><\/h3>\r\n
Three: Shortest Lock-in Period<\/strong><\/span><\/h3>\r\n
Four: Minimise the Market Volatility<\/strong><\/span><\/h3>\r\n