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Best ELSS Funds or Equity Linked Savings Schemes (Tax Saving) are equity diversified Mutual Funds that majorly invest in equity-linked instruments (like shares and stocks) to provide market-linked returns. Typically, 80% of the fund corpus is invested in equity and the remaining in debt instruments.
If you are investing in an ELSS online then the only factors that can delay your investment are the same as those mentioned above for PPF i.e internet connection breaking and the website being down. Also as a first-time investor, mutual funds offer online KYC facility but the maximum amount has a limit of Rs 50,000 as an investment. However, if you are investing in the scheme via cheque you should be aware of the following important points to ensure that your investment date is within the current fiscal.
ELSS funds are chosen by investors who are willing to take risks as these investments are equity oriented. Since there is a risk of volatility, it is advised that you invest for a longer duration as compared to the lock-in period of 3 years.
People nearing their retirement could opt for other tax savings investments like PPF or NSC as they are less volatile. However, people who have just started their career and can invest for a long period of time can opt for the more risky ELSS funds which would give higher returns compared to others.
One option for investment in ELSS is the growth option- where the holder will not receive any benefits in the form of dividends. The investor shall only receive the gains at the end of the tenure. This will help appreciate the total NAV and thus multiply the gains. The only caveat is these returns would be subject to market conditions, which may or may not work in the investor’s favor completely, but it is possible that the profits might be great.
In this option, the holder gets timely benefits in the form of dividends which are completely tax-free.
This is an option wherein the investor gets the option of giving back the dividends received in order to add to the NAV. It is a good option if the market has been performing well and is likely to continue the same way.
While selecting a fund, you need to analyze different parameters and then invest in a suitable one. Also, investing depends on an individual’s financial goals, investment horizon, and risk appetite.
The following table represents the top 6 performing ELSS funds based on the past 3 years. Investors may look at different parameters like returns of 1 year or 5 years, or different financial parameters.
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