Benefits of equity-linked savings schemes go beyond saving taxes: Build retirement corpus with ELSS

financialexpress.com:

The rolling returns of equity-linked savings schemes (ELSS) of the last 10 years show that out of 39 schemes, 25 have completed 10 years and have delivered double-digit returns, according to data collated by Fisdom Research.

Thus, for retail investors, ELSS funds have turned out to be more than just tax-saving instruments. A valuable tool in building a sizeable retirement corpus, these funds are now an essential part of long-term investment planning. And with large-cap stocks expected to perform well now, investing in ELSS can be an attractive proposition for the long run.

For instance, considering actual returns for illustrative purpose, if an investor had opted for Quant ELSS Tax Saver Fund — the top-performing fund over a 10-year period in terms of XIRR with an annual return of 24% — the final corpus after 10 years would have soared to Rs 49 lakh. This is 3.5x of the actual investments of Rs 1.5 lakh every year. Even if he had invested in the least-performing fund which delivered a 10.5% return, the investor would have accumulated Rs 24.5 lakh for the same period, according to an analysis by Fisdom Research.

While several options are available for retirement planning, investing in ELSS can be a wise choice, especially if started early in life. By investing regularly in these funds for a couple of decades, investors can save on taxes and build a substantial corpus for their post-retirement years.

Nirav Karkera, head, Research, Fisdom, says unfortunately, many individuals overlook ELSS’s potential for long-term retirement planning and instead rely on risk-free investments such as fixed deposits, PPF, and traditional insurance policies, which offer relatively lower returns. “While these could form a part of the