Rishi's blog

ELSS mutual funds are famously known for their tax-saving features in addition to being one of the sought-after mutual fund categories. Under Section 80C of the Income Tax Act, taxpayers can save up to Rs. 1.5Lakh in deduction from income tax returns after investing in ELSS. Investing in these mutual funds is an attractive option for those looking for high returns in the long term and tax savings. 

Moreover, other tax saving options under Section 80C have a higher lock-in period, ELSS Funds have a short lock-in period of 3 years and have the potential to offer higher returns in the long run. During the lock-in period, investors cannot redeem their investment. However, they can still receive dividends if the fund declares any. After the lock-in period ends investors can redeem their investments. Most of the tax-saving investment options have a minimum lock-in period of 5 years. This is another reason to consider ELSS investment. 

Another advantage of ELSS mutual funds is the potential for high returns. Since these mutual funds invest in equities, they tend to offer higher returns than other tax-saving options like Public Provident funds. However, the returns from ELSS mutual funds are linked to the performance of the stock market, and can be volatile. So it is important to consider the risk factors.

Investing in mutual funds also offers diversification benefits by investing in a diversified portfolio of stock and equity-related securities. You can also invest through SIP or a systematic investment plan where you invest a small amount of money at regular intervals of time. This can also incorporate a habit of disciplined investment.  

Choosing the correct investment options in the available market can be a little difficult. Always get professional advice from investment coaches to select the right funds to meet your goals.