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Best ELSS mutual funds to achieve long-term goals

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Last Updated: Jan 20, 2020, 11.57 AM IST
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I am looking to build corpus for both short-term and long-term goals by investing in mutual funds via SIP. Can you suggest some ELSS and non-ELSS mutual funds?
---Arjun Kumar Jha

Gaurav Monga, Director, PxG Consultants, responds:


You can consider investing in ELSS for your long-term goals. An ELSS is an equity fund and investments in it is eligible for a tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. An ELSS comes with a mandatory lock-in period of three years. However, you should invest in all equity funds with a longer investment horizon of five and above. A longer horizon helps to reduce the risk. Some of the good performing ELSS schemes are- Mirae Asset Tax Saver Fund, Kotak Tax Saver Regular Plan, and ICICI Prudential Long Term Equity Fund (Tax Saving).

For short-term goals, you should give more importance to the safety of capital, and liquidity. For short-term goals you should invest in fixed income/debt products like fixed deposits, liquid and short duration debt funds.

An ideal debt fund should be selected by keeping in mind your investment horizon. Some of the good liquid and short duration debt funds with investment horizon ranging between 1 month to 2 years are: ICICI Prudential Liquid Fund, Kotak Savings Fund Regular Plan, SBI Magnum Low Duration Fund, and ICICI Prudential Short Term Fund.

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