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What is ELSS Mutual Fund & How to Invest in it

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Published Date: 12 Aug 2021Updated Date: 14 Jul 20236 mins readBy MOFSL
what is an elss fund

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.

What is ELSS Fund?

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.

Features of ELSS Mutual Funds:

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.

Benefits of ELSS Mutual Funds:

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.

4, Discover the ELSS Calculator and gain deeper insights.

Conclusion

Investing in ELSS would be a valuable addition to your investment portfolio. Invest in ELSS online today by opening your own online demat account and identifying the funds that look most reliable and fit your individual requirements.

Related Articles: 5 Mistakes you must avoid while investing in ELSS | How does the Union Budget Change the Pitch for ELSS Funds | Does it add value to invest in ELSS after exhausting your 80C limits?

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Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
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