What is mutual fund? Why ELSS is the best tax saving investment?

mutual fund

We have already told you about the share market and how it works. However, for trading in stock market you need to research and study before investing your money. If you don’t have time for doing the research then you can invest in mutual funds.

In mutual funds, an investor’s money is invested further to get good returns and for this purpose, the mutual fund company charges a small rate of commission from the investor. An investor can choose the type of mutual fund depending on his risk profile and financial goal.

You will have the option of choosing from various funds but let us tell you why Equity Linked Saving Schemes funds are the best tax saving investments. ELSS can provide you with a break of Rs. 1.5 lakh under the section 80 (C) and as the money is mainly invested in equities, the returns from ELSS can surpass the returns received from PPF, NPS and FDs.

Reasons to prove that ELSS is a better tax saving investment:

The returns are higher in long term

As the money is invested in shares and only equity has the capacity to beat the effects of inflation, ELSS gives far better returns in comparison to other tax saving investments.

The lock-in period is lowest

The lock-in period in ELSS is just 3 years while in PPF it is 15 years and in NPS it is till a person gets retire.

Flexibility

ELSS gives the option of stop investing if investor feels that the fund is not performing well and an investor can continue to stay invested even if the lock-in period expires if he feels that the fund is performing well, and these tax-saving funds also don’t have any maturity date.

 

Do let us know in which mutual fund you have invested or plan to invest.

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