{"id":1214,"date":"2024-09-11T07:12:10","date_gmt":"2024-09-11T07:12:10","guid":{"rendered":"https:\/\/bfccapital.com\/blog\/?p=1214"},"modified":"2024-09-11T07:12:38","modified_gmt":"2024-09-11T07:12:38","slug":"what-are-elss-funds-how-to-select-invest-in-the-best-elss-funds","status":"publish","type":"post","link":"https:\/\/bfccapital.com\/blog\/what-are-elss-funds-how-to-select-invest-in-the-best-elss-funds\/","title":{"rendered":"What Are ELSS Funds? | How to Select & Invest in the Best ELSS Funds?"},"content":{"rendered":"

\"Equity-Linked<\/p>\n

Savings are good for everyone; saving is fun. Who doesn’t like savings? Everyone loves to <\/span>Save money on shopping by taking advantage of discounts<\/span>, save some extra food from takeout for later use, and much more. Like takeout food that you saved from last night’s party, savings on taxes can be beneficial. Every now and then, we all love some hacks in life, and saving on taxes is no less so.<\/span><\/span><\/p>\n

Equity-Linked Savings Schemes, or ELSS funds, are\u00a0 Tax- savings schemes in mutual fund investments. In India, ELSS is a type of mutual fund that invests in equity and its related instruments.<\/span><\/p>\n

ELSS Funds: Definition and how it works!<\/b><\/span><\/h2>\n

In mutual funds, equity-linked savings schemes can also be described as tax-saving equities. ELSS gives you a dual benefit of potentially higher returns on investment and tax-saving benefits.<\/span><\/p>\n

It is like hitting two targets with one arrow! One is that you get to save money on taxes; the second is that you benefit from capital growth through investments.<\/span><\/p>\n

The Equity-Linked Savings Scheme provides you with the benefit of saving on income tax under section 80C of India. Under Section 80C of the Income Tax Act, certain investments, such as ELSS investment funds, are exempt from income tax. If certain conditions are met, taxpayers are allowed to have some deductions in income tax<\/span><\/p>\n

\u00a0If you are going to invest in certain investment options approved under the Income Tax Act, you can enjoy the benefit of income tax savings. As a taxpayer, you can avail yourself of deductions and lower your taxable income by \u20b91.5 lakh on some specific financial securities like ELSS, PPF, NSC, etc.<\/span><\/p>\n

Features and benefits of ELSS Funds<\/b><\/span><\/h1>\n

Diversification of the portfolio<\/b><\/span><\/h3>\n

ELSS funds <\/span>Help in portfolio diversification<\/span>. Hence, they <\/span>predominantly invest in equity-oriented funds, and not across a wide range of markets<\/span><\/span><\/p>\n

A large portion of ELSS funds is dumped into equity, covering 80% of the total portfolio in equity-related instruments.<\/span><\/p>\n

This mutual fund invests in all types of companies, either big or small, to seek their grip across a variety of markets and sectors and to get opportunities from them.<\/span><\/p>\n

Dual benefit<\/b><\/span><\/h3>\n

Everything 2-in-1 is always good!<\/span><\/p>\n

ELSS funds give investors the advantage of dual benefits from a single investment scheme: substantial growth in capital and a deduction on taxes.<\/span><\/p>\n

Lock in periods<\/b><\/span><\/h3>\n

ELSS mutual funds have a lock-in period of just three years. During this time, you cannot sell or withdraw your investments.<\/span><\/p>\n

You cannot access or use your funds until the lock-in period ends. Meaning you are literally locked in! It is like a gym membership from which you can’t bail out! You paid for a plan, and you want to quit in the middle (redeem, withdraw) because of a tenure.<\/span><\/p>\n

This usually applies in the case of financial instruments like fixed deposits, insurance, mutual funds, etc. Other financial instruments have a lock-in period of about 5 to 15 years. It is a nice option for people with short-term financial goals.<\/span><\/p>\n

An investor made an initial investment of \u20b91,50,000 in an ELSS fund on April 1, 2017.<\/span><\/p>\n

Short-Term Performance:<\/b><\/span><\/p>\n