ELSS or Equity Linked Savings Scheme is also called First Mutual Fund Scheme. Because most investors like to invest in mutual funds only under ELSS.
You can decrease your tax deduction by investing in ELSS, under Section 80C of the Income Tax Section, up to 1.5 lakh rupees annually. It has been observed that many investors start investing in ELSS so that they can save tax and then gradually they start to participate in other mutual funds and equity schemes.
If you are still thinking that ELSS is better for your tax saving or other government schemes, then my today’s article may prove beneficial for you because I am going to discuss this topic today.
If you are not investing in ELSS for tax saving then you should consider it again on your decision. Look for tax saving, many options are available such as public provident fund (PPF), National Saving Certificate (NSC), etc., where you will definitely get assured returns.
Also Read: Tax saving options
But when you compare ELSS with the other tax saving scheme offered by the government, you will find that there is a lock in period of 3 years in ELSS. whereas the other government schemes like PPF and NSC there is at least 5 years of lock in period.
Returns of the money invested in ELSS are very good when compared to any other tax saving scheme proposed by the Government. I would like to say that in order to meet your long-term financial goal government tax saving schemes will fail, while ELSS is better and gives you handsome returns to reach your financial goals.
Yes, it is a different thing that investing in ELSS can be a little risky compared to tax saving schemes operated by other governments because ELSS invests in the stock market, which is risky for a short time. Therefore, to invest in ELSS, you should make your mind for long term investment, for example from 5 to 7 years. So that you will earn a better returns in the ELSS.
It is supposed that ELSS has a risk, but you get a reward for taking risk. For instance, those who invest in ELSS in the last few years have been given tax free returns of about 13.52 percent in three years and 17.29 percent in 5 years and 9.83 percent in ten years. Which is much more than other government schemes.
Also Read: How to Invest in Mutual Fund
If you are having your interest in investing in ELSS then here are some of the following schemes which have given good returns in the last few years.
- L&T Tax Advantage Fund
- Aditya Birla Sun Life Tax Relief 96
- DSP Black Rock Tax Saver Fund
If you want to invest in these ELSS Schemes, then I will suggest you that you should invest under Systematic Investment Plan (SIP) and invest for a minimum period of 5 years or else the best option will be that you should Invest in ELSS for the long term financial goal. So that returns will also be a better amount and risk will be significantly reduced. Last but not the the least invest in market after reading and understanding all the risk involved.
Tax planning is one of the major tasks for some people. They were at the various stage of tax planning at any point in the financial year.
Some people want to invest as soon as possible and some people are looking for a very good tax savings option and some people want to know about the best tax-saving mutual fund scheme.
So in today’s article, I am going to tell you about the same, that is ELSS.
What is ELSS Mutual Fund?
The Mutual Fund Scheme or Equity Linked Savings Scheme (ELSS) is a very good way to save tax under Section 80C. You can invest up to Rs.1.5 lakh to save income tax in ELSS equity under above section mentioned. Like all the other tax saving options that come under Section 80C, ELSS also has a lock period of 3 years.
If you are thinking of investing in ELSS, it will be better this year to save your income tax that you start investing right now. Apart from this, this option provides financial discipline and also you get a lot of time to discuss in which scheme of ELSS you should invest.
Also Read: What is SIP
How can you invest in ELSS Mutual Fund?
Just go to the company website where you can invest in lump sum or you do not have to do more than just have to start a systematic investment plan that is SIP in ELSS Tax Saving Mutual Fund Scheme. As soon as you start a twelve-month SIP, your money is automatically invested every month in the tax saving scheme.
Also Read: How to Invest in Mutual Fund?
Is there any risk in investment in ELSS?
ELSS scheme is a type of equity mutual fund scheme that invests in the stock market. As we all know that the stock market is an unstable system that has fluctuations, so if you are ready to take the risk, then only you should invest in ELSS.
As mentioned, this scheme has a lock-in period of 3 years but I will suggest you if you have time for five to seven years only then you should invest in this scheme.
Most of other tax saving options offered by the government provide certain income, but the returns are very low. Investing in the stock market by ELSS is likely to get good returns in the long run.
What are the best ELSS Mutual Funds?
The following are the recommended ELSS in 2017 who have given a good performance in the last few years.
- DSP Black Rock Tax Saver
- Axis Long Term Equity Fund
- Birla Sun Life Tax Relief Ninety Six
- Franklin India Taxshield.
Also Read: Tax Saving Schemes in India
As it has been clearly said that “Mutual fund investment is subjected to market risk”. when some people heard this sentence they get feared but If you have researched well about the market and various scheme then you can earn good income in ELSS. But yes I will suggest you make an enough research then and then only invest in any fund because we all know that money cannot be earned easily.
What is SIP (Systematic Investment Plan)?
For those who do not have much information about the stock market or share market, investing through SIP is a better way to reduce the risk of the investor. SIP is a method of investment and savings under which any investor keeps investing in a fixed amount in their shares or mutual fund. In simple words, it can be said that if you don’t have enough money to invest in one time then you can invest using SIP that enables you to move towards your goal monthly or for a fixed term. You can also invest in commodities like gold through SIP. SIP makes the investment easier and the investment continues in disciplined ways and also reduces the risk of investment.
SIP stands for the systematic investment plan. But I would like to call it a sort of investment plan. In an interval of equal time in SIP, an equal amount is invested in one item. An investor has Rs.50,000/- to invest and he does not want to invest them all on the same day due to risk factors. Now he can choose to invest in SIP for ten months at a rate of Rs.5,000/- per month that will also reduce the market risk for him.
Now a days, Banks also offer SIP through savings bank account. once you give them standing instructions they will continue deducting the SIP amount from your bank account directly and investing in the mutual fund on your behalf by their experts.
Features of SIP
- Any investor can invest in the share market, mutual fund or gold ETF through SIP.
- Investment intervals can be kept per day, per week or per month. This is an easy way of investing for salaried professionals.
- Large investments can be made in a regular and disciplined manner by saving some salaries every month.
- SIP can be started by giving an advance check in any mutual fund or giving online instructions.
- SIP can also be made from a small amount of Rs 500 per month.
Benefits of SIP
1. Small investment
It is easy to save a small amount for investment. For a long time, the investment of small amount can give you big returns.
2. Risk factors are less
Actually, when you invest a heavy amount at once and market goes down then think what will happen. SIP reduces such risks as the amount of money you save is not at one time.
3. Easy to invest.
As the investment in SIP can be done by directing online. On a fixed date the fixed amount is directly transferred to the mutual funds in which you have invested in your chosen plan.
At last from my point of view, If you want to invest in share market or mutual fund, you should go further with SIP. Whether you have a heavy amount with you or a small amount to invest. The market is full of ups and downs. one wrong decision can cost you a big loss and one good decision can make you earn a lot. So it’s all about our own sense think and think once again before making any investment.
Nowadays our television screens are flooded with mutual fund advertisement. Everybody wants to know about it. As I have discussed the mutual fund in my recent article about what is mutual fund and its type. Today I am going to discuss various points about how to purchase mutual fund and how to invest in mutual funds. Where to buy mutual funds. It should be brought online or offline, which is the formalities that have to be completed and all.
How to buy a mutual fund?
This will be the very first question that will arise in your mind that how to buy a mutual fund? Mutual funds can be bought both offline and online. There is various companies available in the market from where you can purchase a mutual fund. All you have to do is before investing in a mutual fund, you should thoroughly research and decide which asset management company to invest in a mutual fund scheme.
Examine different types of mutual funds, their investment objective and past performance. However, the previous performance cannot be guaranteed that in the future, any mutual fund scheme will perform as it has performed earlier. But yes the chances are less of degradation of performance chart.
Now there are various ways to purchase a mutual fund.
1. Online purchase:
To invest online in a mutual fund, you can invest online by going to the site of a mutual fund asset management company. The names and web addresses of mutual fund asset management companies you can found on the search engine or visit SEBI.
2. Offline purchase:
You can use the services of a financial intermediary to make an offline investment in a mutual fund. These are called mutual fund distributors. You can invest in mutual funds directly by going to the office of the mutual fund company. A bank, non-banking finance company or personal financial advisor can be a mutual fund distributor.
3. If you have a demat account with a broker, you can also buy a mutual fund from that broker. In this way, the mutual fund purchased will be deposited directly into your demat account.
Note: Whether you buy offline or online mutual funds, you can also order a SIP purchase in your form. For this, you can also give your bank details and ask for an automatic purchase.
Formalities for buying mutual funds:
In order to purchase a mutual fund, you will have to fill out a KYC form and provide passport size photograph along with proof of identity and copy of residence address.
Also Read: ULIP vs Mutual Fund
Purchasing mutual fund is not a big task but finding the best place for investing your saving for better return is a tricky game. Mutual fund investment is really good and can be proved to be the best place for all types of investors. Put a habit of investment from today and see your future dreams come true. Small investments made in mutual funds can be a huge amount for one day.
Disclaimer: Mutual fund investment are subject to market risk, please read the offer document carefully.
Indian post office provides you various options for your saving. One of the best option for all class of people is the post office recurring deposit plan. The post office recurring deposit is a recurring deposit account, for adding small savings every month. This small saving is converted into a large amount of money after certain years. Generally, these savings are for the future of the member or for children and also for yourself.
Recurring means to be repeated in a certain time. You have to deposit a fixed amount every month in the Post Office Recurring deposit. This is a great savings plan for salaried people and housewives. You can easily open this account by determining any monthly amount to fulfil a dream of your future.
Features of post office recurring deposit scheme
- You can open this account by visiting the nearest post office. Or the post office agent can also open this account by visiting at your home.
- On post office recurring deposit your interest rate is fixed.The interest rate that is fixed at the time of account opening. After that for five years, the same interest rate keeps circulating in your account.
- Agents can collect this monthly amount by visiting your home also or you can deposit by visiting nearest branch.
- This account can be opened with a minimum amount of Rs 10 every month. No maximum limit has been set for depositing in the account.
- Post office recurring deposit can be opened by cash or check. Nomination facility is available at the time of opening the account. The account can be transferred from one post office to another post office. You can open as many accounts as you want at any post office.
- The account can also be opened for a minor. The minor account can be opened and operated by anybody who is 10 years and above. After becoming an adult, a minor has to apply for conversion of his account.
- The joint account can be opened by two adults. You get a discount on the advance deposit of at least 6 instalments. The joint account can be converted into a single account. Once a year, the account holder can withdraw up to 50% of his balance.
- On April 1, 2017, the interest rate on post office recurring deposit was 7.2% quarterly compound per year. The interest rate can change every quarter by the government but once the account starts, there will be no change in the interest rate of the account and once the interest rate is fixed on the account. It will continue for five years.
Documents required for post office recurring deposit account.
Aadhaar card, PAN card and two passport size photographs will be required to open post office recurring deposit account. You will have to fill out the account opening form and KYC form.
Today I have tried to give you information in detail about the post office recurring deposit. From my point of view if you are a housewife or having less earning and you want to save for your future then this plan can be proved to be the better option for you.