ELSS, which is the abbreviation for Equity Linked Saving Scheme, is absolutely the best scheme for long term investment. This scheme of the mutual fund is offered by almost all of the Indian fund houses and is managed by experienced professional people, or specifically Financial Fund managers. It is unanimously known that ELSS is the only one existing variety of mutual funds that allow for tax deduction under the 80C act of Income Tax. Other options come under the category of 80C like PPF, ULIP, and NPS, and so on.
However, the reasons why tax-saving ELSS has been considered amongst the best popular investment:
Highest Returns on Investment (ROI):
The purpose of any good investment should be to decrease tax amount and to gain high returns. These two purposes are duly served by an Equity Linked Saving Scheme investment. The reason is that this kind of investment invests mainly in equity-based instruments. Therefore, the returns are expected to be much higher than other tax saving schemes. Research shows that ELSS is the best choice for those who intend to invest in a long or medium time. Statistics show an ELSS investment generates almost 12% in ten years, whereas, PPF generates only 8%. So, ELSS is a beneficial investment.
Short time for investment:
PPF and other tax deducting schemes need the investor to invest the money for at least five years. On the other hand, ELSS requires the investor to invest the money for a shorter duration. The minimum duration for an ELSS investment is three years. This certainly makes ELSS the better option for 80C investment, as the investor’s money is reserved for a shorter time. The shorter the lock-in period is the better is the scheme.
Amount of investment:
In every investment option, there are two options for contribution. One can invest by contributing monthly, or one can contribute with a lump sum amount. In PPF, the minimum amount for investment is 500 INR and the upper limit of the investment amount is 1.5 lakhs INR for every year (financial). As for a tax-saving ELSS investment, the payment option is monthly. The monthly investment amount, which is also known as SIP or Systematic Investment Plans, the lower limit of investment is 500 INR. There is no legal upper limit for investing. Therefore, ELSS is the better option for big investors.
What is the best feature of ELSS? It is its flexibility. The investor can’t move from other investment schemes if he finds them unsatisfying. However, in ELSS, one can immediately move the money to another fund if it is required.
It is mandatory to consider every aspect of all the investment schemes before investing. You can consult your expert to decide before choosing to invest in ELSS.