Today’s topic is whether or not buying mutual funds for tax purposes is a wise idea. Before we can determine whether it is beneficial or not, we must first determine where and how much we can gain from income tax. We get a tax rebate of Rs150,000 under the 80c section of the income tax structure, and we normally rely on our auditor’s expertise to guide us through such investments.
There are a variety of options available to us, including insurance, PPF, fixed deposits, and, most importantly, ELSS.
ELSS stands for equity link savings scheme and is a product of mutual fund.
Different products have their own set of advantages and disadvantages, but ELSS has outperformed all traditional asset class in terms of long-term returns.
As the name implies, ELSS invests the majority of your money on the stock market, which is risky. In the long run, risk is effectively reduced.
Some of the biggest advantages of investing in ELSS are
1. Potential of giving Highest returns
2. Lowest lock in period
3. Flexibility in terms of payment either lump sum or like SIP (Fortnightly or Monthly)
4. Better Post tax returns
5. Regular investing is hassle free and convenient.
As the fund invests a large amount of their money in blue chip firms, they have a somewhat better level of safety than other mutual funds.
After doing considerable research, I believe that buying mutual funds for tax savings is a great idea, and I won’t hesitate to put a large amount of my 80C investment into ELSS.
Take advantage of SIPs and start investing today instead of waiting until March, for you tax planning.
Choosing the right ELSS fund is critical; always get advice from your financial advisor.
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