+91 888 480 0789
Login/Register
Login/Register
Facebook
Twitter
LinkedIn
YouTube
Instagram
Pinterest
FundsTiger - Fast Loans for IndiaFundsTiger - Fast Loans for India
  • PERSONAL
    • Apply Personal Loan
    • How it Works – Personal Loans
    • Eligibility and Docs for Personal Loans
    • Loan Types
    • FAQs for Personal Loans
    • Champion Registration
    • Apply Home Loan
    • Eligibility and Docs for Home Loans
  • BUSINESS
    • Apply Business Loan
    • How it Works – Business Loans
    • Eligibility and Docs for Business Loans
    • Loan Types
    • FAQs for Business Loans
  • CREDIT SCORE REPAIR
    • Credit Score Booster Consulting
    • Loan Balance Transfer Counselling
    • Financial Health Checkup and Booster
  • BLOGS
  • GUIDES & TIPS
    • Calculators
    • Credit & Cibil Score

For security reasons, your session has been timed out. To continue, Please login.

Why you should invest in ELSS?

February 13, 2019InvestmentsSuganya Arumugam

There are various tax savings options available out there under section 80C of the Income Tax Act, equity-linked savings schemes (ELSS) have emerged as one of the most popular options. ELSS is a tax-saving mutual fund with a three-year lock-in period, where investments are made in equity-related instruments. For long-term investors, choosing ELSS over other 80C products like PPF and NSC is more beneficial from a wealth creation perspective.

Tax Benefit under Section 80C

As said before, your investments in ELSS are eligible for a tax deduction of up to Rs 1.5 lakh from your gross total income under Section 80C of the Income Tax Act. Though you can avail a maximum tax deduction of only Rs 1.5 lakh under the section, there is no limit on the amount you can invest in these schemes.

Long-Term Returns

Being linked to equity, ELSS funds can give inflation-plus returns in the long term. While returns are not guaranteed, historically, we have seen that over longer periods of 7-10 years, equity portfolios are consistently able to deliver returns which beat inflation by a reasonable margin. Fixed-return products like savings certificates or fixed deposits are less efficient at doing this over the long term. Those are more oriented to giving income rather than creating wealth.

Lowest lock-in period

All tax saving investments typically comes with a mandatory lock-in period. For example, PPF comes with a 15-year lock-in period. Tax-saving term deposits have a lock-in period of five years. ELSS comes with a lock-in period of three years. Though ELSSs come with a lock-in period of three years, invest in ELSSs with an investment horizon of at least five years in mind. This is just to be on a safe side as ELSS invests predominantly in stocks. And stocks are risky and volatile in the short term.

No maturity date

Most tax-saving investments such as PPF, tax-saving term deposit, among others, come with a maturity date. The PPF account matures in fifteen years and it can be renewed for another five years. An ELSS has no such fixed maturity date or period. You can continue to hold on to your ELSS investments as long as you wish.

Enabled for SIP

ELSS schemes have the SIP facility too that enables you to allocate smaller amounts every month rather than having to put in a lump sum. For those who earn a monthly salary, this is a useful option. However, keep in mind that each new instalment will have a separate date on which the three-year lock-in gets over. For long-term investors, this is not an issue as the investment can well be held for many more years.

Equity Exposure

If you are traditional investors who predominantly invest in tradition investments that come with assured returns, you should consider investing in ELSS to take a small exposure to equity. ELSS is considered ideal for first-time investors to enter the stock market. The mandatory lock-in period would help investors to weather the volatility typically associated with the stock market. In fact, you can devote your investments in ELSS for a specific long-term financial goal.

10 per cent Tax

ELSSs, or any equity mutual funds, for that matter, will not offer tax-free returns any more. Long-term capital gains made from ELSSs would be taxed at flat 10 per cent because of the re-introduction of LTCG tax on long term capital gains of over Rs 1 lakh on equity schemes. However, even after the new 10 per cent tax, ELSS would provide better post-tax returns than other traditional tax-saving investments like PPF, NSC, five-year FD, etc. over a long period.

FundsTiger is an Online Lending Marketplace where you can search for and avail Fast and Easy loans from almost all the leading Banks and NBFCs. You can Apply for Loans with Best possible Rates of Interest and terms for Personal Loan, Business Loan , Home Loan and Car Refinance Loan.

Fixed Deposit is a better Investment option
8 Best Investment options in India
Top 5 Things you must do before you start Investing
Top 7 Investment mistakes you must avoid
Previous post PAN-Aadhaar linking mandatory for Income Taxpayers Next post Tax on Rental Income




Recent Posts

  • 7 Important Financial Checklist when your kid turns 18
  • Secured Loans Vs. Unsecured Loans, Collateral Free Loans for Business Loans or Personal Loans in India for 2021
  • Business Loan Rejection Reasons – a Quick Guide for Post Corona India in 2021
  • Secured Business Loans for 2021 – All You Need to Know for Your Business Needs
  • What creates a good CIBIL Score?
  • Personal Loans
    • Apply Personal Loan
    • How it Works
    • Eligibiity and Docs Required
    • Types of Personal Loans
    • FAQs
  • Home Loans
    • Apply Home Loan
    • Eligibiity and Docs Required
    • Home Loan Guide
    • Types of Home Loan
    • FAQs
  • DigiLocker
  • Income Tax
    • ITR Forms
    • IT Returns
  • Credit Cards
  • Interest Rates
    • Personal Loan Rates
    • Business Loan Rates
    • Home Loan Rates
    • Fixed Deposit Interest Rates
  • Lowest Interest Rates
    • Lowest Personal Loan Rates
    • Lowest Business Loan Rates
    • Lowest Home Loan Rates
    • Lowest Loan Against Property Rates
  • Budget 2019
    • Budget 2019 – Tax breaks
    • Budget Impact on Business and MSME
    • Highlights of Interim Budget 2019-20
  • User Guides
  • Business Loans
    • Apply Business Loan
    • How it Works
    • Eligibiity and Docs Required
    • TypeS of Business Loans
    • FAQs
    • CGTMSE-Loans
    • Mudra Loan(PMMY)
  • PMAY
    • Pradhan Mantri Awas Yojana
    • FAQs On PMAY
  • Credit Score
    • Know your Credit Score
    • Improve your Credit Score
    • Good Cibil Score
    • CIBIL Score Facts
  • Tools
    • Best Personal Loan
    • Best Business Loan
    • Best LAP
  • Investments
    • Top 7 Investment mistakes
    • Top 5 Things before investing
    • 8 Best Investment options
    • Fixed Deposit is a better Investment option
    • Why you should invest in ELSS?
  • Lenders
    • Our Lenders
    • How it Works
    • FT Credit Analyzer
  • Partners
    • Why Partner With Us
    • Register as a Partner?
    • Affiliate Program
  • Resources
    • IFSC Codes
    • MICR Codes
    • Small Business Mentors
  • Car Refinance
  • Poplular Blogs
    • NPS
    • LAP
    • Tax Benefits
    • CIBIL
    • Mutual Funds
  • Others
    • Careers
    • Contact Us
    • Terms of Service
    • Privacy Policy
  • FundsTiger TV
  • Credit Score Booster Consulting
  • Loan Balance Transfer Counselling
  • Financial Health Checkup and Booster
  • Subscribe to FundsTiger
  • Loan Calculators & Guides
    • Home Loan Eligibility Calculator
    • Business Loan Eligibility Calculator
    • Personal Loan Eligibility Calculator
    • Home Loan EMI Calculator
    • Business Loan EMI Calculator
    • Personal Loan EMI Calculator
    • Car Loan EMI Calculator
    • Reduced vs Flat Rate Calculator
    • Fixed Deposit (FD) Calculator
    • Working Capital Calculator
  • Saving Schemes
    • Post Office Saving
    • Atal Pension Yojana
    • Sukanya Samriddhi
    • Kisan Vikas Patra
    • Senior Citizen Saving
    • PPF
    • EPF
    • VPF
  • Year 2019
    • Investment Lessons 2019
    • Financial Resolutions 2019
    • Saving Tips 2019
    • Financial Deadlines 2019
  • About Us
    • Overview
    • Mission and Values
    • Why FundsTiger
    • Our Team
    • Our Investors
  • Refer & Win
  • Popular Playlists
  • HOME
  • ABOUT US
  • BUSINESS LOANS
  • PERSONAL LOANS
  • HOME LOANS
  • CONTACT US
  • ToS
© 2021 All rights reserved. FundsTiger