Investors, both new and existing, prefer to maintain diversified portfolios, which are greatly enriched by the addition of equity linked savings scheme (ELSS) instruments. ELSS mutual funds offer a great chance for achieving profitability to investors.
One of the best instruments for tax savings, ELSS mutual funds are popular among both existing and new shareholders. The ELSS mutual funds enable investing primarily into equity securities and other equity-related products. There are several features and benefits offered by ELSS funds, which offer them a competitive advantage over other investment instruments in the market.
It is important to understand the features of ELSS mutual funds, if you are planning to buy ELSS online. Read on to learn more of the features before you buy ELSS funds.
1. Many investors want to understand the possibility of liquidity of an investment instrument. Different instruments offer different lock-in periods for funds. With ELSS mutual funds, investors are subjected to a lock-in period of 3 years, which ensures easy availability of funds if the need arises.
2. Knowing profitability is essential to assessing whether you should invest in a particular instrument. Equity linked savings schemes are popular because of the high returns they generate and offer to the investor.
3. Tax savings are huge with an ELSS. Under Section 80C of the Income Tax Act, 1961, you can save up to Rs. 1.5 lakh while additionally saving up to Rs. 1 lakh as Long Term Capital Gains (LTCG), which is exempt from taxation. However, if your returns are higher than Rs. 1 lakh annually, you are liable to pay 10% of the returns as LTCG taxes.
The benefits of ELSS mutual funds are significant, and prove useful to both existing and new investors. Read on to learn why you should buy ELSS at the earliest.
1. For investors seeking diversification of their investment portfolio, ELSS funds are a great option since they invest across a range of companies of all sizes and sectors.
2. You can easily begin investing in an ELSS fund with as little as Rs. 500. You can start building a significant corpus from a very small initial amount, which is a great relief for new investors.
3. The three-year lock-in period of an ELSS fund ensures that you are making forceful savings, while also ensuring that the lock-in period is short enough that you can get access to liquid funds whenever required.
Investing in ELSS would be a valuable addition to your investment portfolio. Invest in ELSS online today by opening your own demat account and identifying the funds that look most reliable and fit your individual requirements.
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