It is high time that we start planning a decent investment portfolio.
Also Read: Long-term investment – You Reap What You Sow
Before we can decide on any one of the many investment plans, the major factor that strikes us is the benefits that we are going to derive from it.
Apart from the substantial returns, an efficient tax planner also tries to seize the tax benefits simultaneously.
One of the investment plans that offer both the tax benefits and efficient returns is an Equity Linked Investment Scheme (ELSS).
Don’t forget to read our free ebook on ELSS.
In this article, we will understand at length about Equity Linked Investment Scheme, which will give a thorough understanding and relief the prospective investors from the cumbersome exercise of selecting a particular investment plan among many.
To manage your personal finances, download Kredent Money App, a one-stop tool to assist you in your financial journey
What is Equity Linked Savings Scheme?
Equity Linked Savings Scheme is one of the investment avenues in equity mutual fund schemes wherein prospective investors get a two-way benefit of capital appreciation and tax advantage.
Investing in ELSS allows you to claim tax deduction under Section 80C of the Income Tax Act, 1961.
You may also opt for Systematic Investment Plan (SIP) under equity-linked saving investment for regularizing your investment.
Salient Features of Equity Linked Savings Scheme:
As compared to the other investment options such as Public Provident Fund (PPF) with a minimum lock-in period of 15 years, National Savings Certificate (NSC) of 6 years, ELSS provides a shorter lock-in period of 3 years from the date of investment.
Returns in ELSS directly linked to the equity market.
Since the investment in case of the equity-linked investment scheme is made in a diversified range of equity itself, the chances of returns are quite high, though this is subject to high risk as well.
Though ELSS is not meant for risk-averse investors, it is best suited for those investors who are willing to take high risk and enjoy the benefits of prospective high returns.
Learn about different mutual fund schemes in NSE Academy Certified Financial Planning and Wealth Management course on Elearnmarkets.
In case you invest in dividend scheme of ELSS, the dividend earned under that scheme will be exempted from taxes.
80C deduction benefits:
By investing in ELSS, you can also be benefited with the deduction up to Rs. 1.50 lakh.
When compared to the other traditional method of tax saving techniques such as bank fixed deposits, Public provident fund (PPF), National Savings Certificate (NSC) the lock-in period of ELSS is much lower.
Know more about ELSS by watching the video below:
After having read about the Equity-linked savings scheme, we have come to know that it carries high risk along with the cushion of equity investment.
However, any kind of investment decision works best once you have done a thorough research on the past performance of that particular investment scheme or investment plan.
Kindly do your homework and go ahead to reap the benefits of this investment scheme.