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Best Tax Saving Mutual Funds or ELSS Fund to invest in 2019

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Best tax saving mutual funds or ELSS Fund

Investment is based upon two psychologies; one half is all about making money and the other half is all about capital protection or tax saving. There are numerous numbers of option to make money i.e. Stocks, bonds, mutual funds or government securities. But there are few investing options available in capital protection or tax saving. For a common investor, first option that comes in mind for tax saving is insurance plans. But there are other options available too, one such option is Tax saving mutual fund. It can give an investor the dual benefit of tax rebate and market linked returns for longer term. There are other options such as Tax saving fixed deposit, PPFNational Saving Certificate (NSC). But the rate of returns and benefits are quite limited as compared to tax saving mutual fund or ELSS. 

If your financial goals are good returns, moderate risk and tax saving under section 80 (C), then ELSS mutual funds are for you. It is one of the best avenues of tax saving. It has a lock in period of 3 years and provides tax benefit up to Rs 1.5 lakh. One cannot get the benefits if the investment exceeds beyond Rs 1.5 lakh. There are various benefits of investing in the ELSS Mutual Fund.  

  • The biggest benefit of investing in these funds is diversification, it provides through one investment. ELSS Mutual Funds invest in companies in all sizes, whether its Large Cap, mid cap or small cap. Generally, it invests approx. 65% of their assets in equity and then the rest they invest in other asset classes such as fixed income securities, cash and cash equivalents. 
  • One can start investing in these funds with a minimum amount of Rs 500 every month. It comes with a lock-in period of 3 years, so If in case any investor invests through the SIP route, then the redemption will happen only after 3 years from the date of investment. Similarly, the next redemption will complete only after three years. 
  • Since, the majority of the ELSS investment is made in the equity market, the returns are much higher than the majority of tax saving instrument in the long run. 
  • It has the lowest lock-in period, compared to other tax saving instrument. 

One must remember certain points, before investing in these schemes. One should not invest in ELSS pnly because they provide better returns over a long period but before investing, it’s better to look for your risk appetite to invest in an equity scheme. Let’s look at some of the top mutual funds in this category to invest in 2019, according to Gulaq methodology: 

  • Kotak Tax Saver Scheme(G)-Direct Plan
  • Mirae Asset Tax Saver Fund(G)-Direct Plan
  • Canara Rob Equity Tax Saver Fund(G)-Direct Plan
  • Tata India Tax Savings Fund(G)-Direct Plan

These funds offered huge benefit, especially to average investors, as it gives them a chance to invest in the equity market, who are otherwise afraid of investing in it due to high risk and less awareness about the market.  

Thinking about Investments. Click here to know what is the right investment for you

*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.

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