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A complete guide for investment in ELSS

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Businessman touching financial dashboard with key performance indicators

Investment in various segments can help one get a sound portfolio over a period which can make him achieve all of his financial goals easily. Those who have a huge income and fall in the tax bracket always think of the instruments that can help them save on the front of tax. People prefer to invest in land, gold, stocks, mutual funds and own business which can help them to earn better return at the decided period. However, all these instruments or segments have different pros and cons which one must check before investing.

In the case of gold, one can fetch a good return after a few years of purchase and also have sound liquidity, but it is not a good tool for the short run. In the long term, it can help, but on the other hand, the risk factors of stealing and damage to the metal are also there which one must not ignore. It cannot help to save tax also.

The ELSS:

The ELSS is an option where one can invest money in the mutual fund and earn a good return. It also helps one to save tax as the money is blocked for a certain period. The return in a direct mutual fund app for a considerable period is good in majority cases, and hence one can also expect a good return on the invested amount after a certain period. However, it is a close-ended option, and hence once the form is filled and money is invested one cannot redeem it till the provided period, and that is why the tax benefit on the same is offered to the investor.

It is known as an equity-linked saving scheme where the amount is invested in units, and one can track the price of the same on the site of the concerned company. The question of how to invest in ELSS is quite obvious among those who love to fetch good return with saving on tax.

The option:

Investing in a mutual fund is much simple. One needs to check the options first and decide to go for a particular option. Almost every MF company has ELSS on its products list, and therefore one needs to choose it prudently. The rate of return is the most important tool to measure the growth of the money invested. Other than the rate of return there are also options such as growth and dividend which must be checked.

Important points:

There are some important points that need to be checked before investing in ELSS. Though every company discloses the ELSS after approval from the authorities only, one needs to verify the same on the official site of the company with its registration number. Comparison among various ELSS options from different companies can help one choose the right option easily. One can also check the dividend as well as growth option of each of the players in the market with their AUM which can help one have a clear picture.   Usually, the period for withdrawal of the invested amount is 3 to 5 years that one needs to check before investing.