ELSS mutual funds: Top 5 reasons to invest in equity-linked saving schemes

ELSS funds: Equity-related savings systems are tax-saving funds that help an investor beat inflation in the long run. This tax savings system is an equity fund with three-year lock-in with income tax benefit in accordance with section 80C of the Income Tax Act. Like all other equity funds, an investor can invent in ELSS funds in SIP mode with a minimum monthly SIP of 500.

Sujit Bangar, founder of Taxbuddy.com, said of ELSS funds, “ELSS funds are a good instrument option for equity investors who want to save tax and grow wealth at the same time. It is an investment instrument for tax-saving funds that an investor can request tax exemption under section 80C at up to 1.5 lakh investment during a financial year. “

Sujit Bangar from Taxbuddy.com listed the following 5 reasons why these tax-saving funds are a great investment option for a serving individual:

1]Three-year lock-in: It comes with locking in three years. So automatically you stay invested for a longer period of time to get a good return.

2]Options for direct funds: Like all equity funds, ELSS funds also provide direct fund alternatives to an investor. With a lower expenditure ratio, these funds allow maximum investment because the expenditure in such funds is very low.

3]Exposure to equity investments: “ELSS is a great way to gain exposure in the stock market. I think it’s the first step towards building equity as an asset class in your portfolio,” says Sujit Bangar.

4]Provision for tax-free income: The profit you earn on ELSS is tax-free to the extent of Rs. 1 lakh in one year. If the profit exceeds one year, the profit shall be taxed at 10 percent.

5]SIP options: ELSS can be started with as low a monthly SIP as 500. So it makes it easy to start with the habit of saving.

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