Investing in ELSS mutual funds: 6 things to know
ELSS) serve a dual purpose, offering potential for wealth growth, while providing tax-saving benefit under Section 80C. These also have a short lock-in period of three years, compared to other schemes like the PPF, Sukanya Samriddhi Yojana and NSC. Here’s how to invest in these schemes.
ELSS mutual funds
ELSS funds are equity-oriented mutual funds that primarily invest in equities and equity-related instruments. These have a lock-in period of three years, making them suitable for long-term wealth accumulation. ELSS funds are best suited to investors with high risk appetite and long-term investment horizon of at least 3-5 years.
Selecting the right fund
It is important to conduct thorough research and due diligence to choose the right ELSS fund that aligns with your investment goals and risk profile. Consider factors such as fund performance, fund manager’s track record, investment strategy, and expense ratio.
Evaluating past performance
Review the historical performance of ELSS funds across different market cycles to gauge their consistency and resilience. Look for funds that have delivered competitive returns compared to benchmark indices and peers over the long term.
Investing systematically
Opt for a systematic investment plan (SIP) approach to invest in ELSS schemes regularly. SIPs enable investors to benefit from rupee-cost averaging and inculcate discipline in investment while mitigating the impact of market volatility.
Points to note
- It is important to note that unlike other equity mutual fund schemes,
