5 Reasons Why You Should Invest in Equity Linked Saving Scheme(ELSS)?

Investments in Equity always carry a risk of losing money as the market is always in a state of flux. Smart & sharp is when one is open to save money & invest for the long term. It is February & high time to save tax. Equity Linked Savings Scheme or better known as the ELSS scheme is one of the best avenues to park money & save taxes under section 80C of Income Tax. Many might think is it worth to invest or not. The market is always in a state of flux which is coupled with some economic hiccups & inflation, is making investors to double think into tax saving schemes. Here is why you should invest in ELSS.

1. ELSS Mutual Funds help you save tax Section 80c

The foremost purpose of investing in a tax-saving plan is to attain some tax benefits. Well, ELSS mutual funds are permitted to claim tax rebate up to Rs 1.5 lakh under Section 80C of Income Tax. Generally, when it comes to saving tax, we think of products like PPF or ULIP. But ELSS mutual fund is one such tool that can help you save tax in the least lock-in period.

2. Lowest Lock-in period

ELSS mutual funds come with a lock-in of three years from the date of investment. Funds are obligated to be locked for three years and will be free of exit load once they have completed the lock-in window. This also helps in building a good corpus & garner savings habit. This is one of the avenues with the shortest lock-in period among all tax-saving instruments. Also with the one would garner the power of compounding. Since markets are always in a state of flux, investing in ELSS mutual fund one can average out the best during the lock-in period.

3. The longer you hold, the better the chances of returns

It is not a hidden truth that the longer you hold on to your investments the better chances of building a good corpus. ELSS investments can be a good source to invest for the long term & save tax year on year. It is one of the best investment instruments to generate & reap great profits. As it is said that a portfolio should be well diversified to fulfil all needs, ELSS mutual fund is one of the best tools to invest & save tax as well, just like a double bonanza to your portfolio.

4. Develop the habit of saving regularly

Many people have the misconception that in ELSS only big amounts can be invested. Investments in ELSS Mutual Funds can be easily started with just Rs 500. It allows systematically investing every month & letting your savings turn into a big corpus. Also, the returns will be tax exempted.

5. Exposure to Equity

ELSS mutual fund is one such investment tool that gives a fine exposure to investors in Equity Markets. While normal savings yields 8 to 9 %, ELSS investments would yield much more than this. It is also a great way to average out in the fluctuating markets.