What is ELSS Mutual Fund?

What is ELSS Mutual Fund?

Equity Linked Savings Scheme

ELSS is a diversified equity mutual fund, where the majority of the corpus is invested in the equities. investors enjoy two benefits

  1. Market Edge for the investment 
  2. Save Tax under section 80C

Locked in period 3 years

There are two options.

  1. Growth: You will get a lump sum after completing the lock-in period
  2. Dividend: the investor gets a dividend whenever they are announced by the mutual fund house even in the lock-in period

Advantages of ELSS

  • Low lock-in period as compared to other investments under 80C like PPF(15 years), NSC (6 years) and FDs (5 years)
  • Give better returns.
  • Its a gateway to equity investment.

TIPs

  1. ELSS is the best option under 80C
  2. TRY ELSS if never invested in the market.
  3. Do tax planning at the start of the year. 
  4. If you plan to invest in ELSS, go the SIP way to average out the market fluctuations.

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