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Essential guidelines before investing in ELSS mutual funds

Equity-linked saving scheme (ELSS) is one of the best-considered schemes which can help people in getting subtraction from taxes up to INR 1.5 lakh by just investing a small amount in it. The ELSS funds are approved of section 80C by the income tax act. If one is thinking to invest money under such section and schemes than there is nothing better than ELSS. There is no burden on investing a bigger amount in such funds, one can even invest INR 500 in it.

Here are some guidelines which are beneficial before investing in ELSS:

  • It is really crucial to understand that ELSS funds are not just only about high returns and rewards. One should not invest their money in it because of this. The risk-taking ability matters in it. Think about your risk enthusiasm then invest in an equity-linked saving scheme.
  • The ELSS funds are subject to market risks but they are likely to provide long term rewards against the investments.
  • The ELSS funds are invested in stocks. For people who cannot bear, loses can shift to PPF or fixed deposits and can overlook about extra returns.
  • Another thing to be kept in mind is that ELSS funds have a lock-in period of three years which is the shorted among all funds. But one should measure the market prospects should instead opt for five to seven years of investment in ELSS funds.
  • People should continue with the scheme as long as they are providing benefit. Thus, meaning that, think before redeeming the investments after the completion of the lock-in period.

Finest tax saving mutual funds of 2019

People are willing to invest their money in the tax saving mutual funds because they have a short lock-in period, which is three years. One can gain the tax deduction under the section 80C following the plan of EEE which is no exit burden, wealth addition, tax release. Another thing is that one can monthly invest even the lowest amount in ELSS funds by using SIP. They also have two times better returns than fixed deposits or PPF.

Here are some of the best mutual funds for tax saving which one can opt.

  • Reliance tax saver fund – the three-year returns are 9.2 percent. Whereas, the five-year returns is 21.12 percent.
  • SBI magnum tax gain scheme – the three-year returns are 8.7 percent. Whereas, the five-year returns is 17.4 percent.
  • ICICI prudential long term equity fund – the three-year returns are 12 percent. Whereas, the five-year returns is 20.1 percent.
  • DSP Blackrock Tax saver fund – the three-year returns are 14.3 percent. Whereas, the five-year returns is 20.7 percent.
  • Aditya Birla sun life tax relief – the three-year returns are 15.9 percent. Whereas, the five-year returns is 23.5 percent.

Comparing ELSS with other schemes like NSC, PPF or fixed deposits. The returns are taxable in all these schemes whereas it is not the case in ELSS funds. The returns are great and also tax-free. ELSS funds are a better option for those who want a deduction in taxes. Learn more about different types of individual and mutual funds, on this website: www.europelibertyreserve.com

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