Top ELSS Funds to Invest
ET Online | Updated : Jun 28, 2018, 02.10 PM IST
Though there are many investment options available under Section 80C, many investment experts believe that an ELSS is the best way to save taxes and create wealth in the long term. This is because of a few reasons.
One, most investment options available under Section 80C are government-backed safe instruments like Public Provident Fund and National Saving Certificate Scheme. These schemes typically offer modest returns. That means investors would find it difficult to beat inflation with these investments. Beating inflation is crucial to create wealth for long-term goals.
Two, an ELSS invest mostly in stocks. And you already know that equity has the potential to offer superior returns than other asset classes over a long period. Countless studies back this claim. So, if you want inflation-beating, better post-tax returns, you should take a close look at ELSS funds.
Three, an ELSS has the shortest lock-in period among the investment options available under Section 80C. An ELSS has a mandatory lock-in period of three years, whereas other options like a tax-saving fixed deposit has a lock-in period of five years. PPF is a 15-year product, though it allows you to withdraw partially before maturity.
Four, ELSS funds also help investors to get used to the volatility typically associated with the stock market. Since these schemes come with a mandatory lock-in period of three years, investors would get used to the ups and downs in the market. Many first-time investors often panic when they see their investments lose value significantly in a market downturn. ELSS helps investors to weather this aspect and reinforce their faith in equity to offer superior return in the long term.
Five, ELSS fund serve as a stepping stone for many mutual fund investors. Once investors get used to investing in equity mutual funds and earn superior returns, they start investing in other equity mutual funds to achieve their long-term financial goals.
Now, are you looking for ELSS funds that would help you to create wealth over a long period. Here are some ELSS funds that you can bank on to save taxes and create wealth.