What is Equity Linked Saving Schemes?
ELSS is an open-ended mutual fund scheme which mainly make investment in equities. It comes with a statutory lock-in of 3 years. The funds are managed by an expert fund manager who skillfully balances the risks and returns on your portfolio.
Types of ELSS:
Growth funds: Growth funds are mainly diversified portfolio of stocks that aims to appreciate the invested capital with no or little dividend pay-out. It helps in long-term wealth creation.
Dividend payout: The dividend pay-out option is of two types. In Dividend pay-out option investors receive regular tax-free dividends. Consequently, in dividend reimbursement option investors can reinvest the dividend payments into new investment and strengthen their portfolios.
Why is ELSS better than all other 80C Investments?
While investing money, other than calculating the risk and returns the investor must lay emphasis on the tax outgo. Thus, investing in ELSS can be a wise decision as it considerably bring down your tax burden. Due to higher tax benefits, the equity-linked savings scheme has surfaced as the most practical option for investors among investments listed under Section 80C of the ITA.
What makes the ELSS popular among investors?
Through ELSS you earn comparatively more returns. Thus, not only you save taxes on investments but also get better returns on investment. But to reap maximum benefits you must invest in ELSS for medium to long-term. While other tax-saving instruments yield returns between 7-9%, ELSS outperform all by giving 12% returns over an investment tenure of 10-years.