When we plunge our hands into investments, we naturally take that step to secure our retired life. However, many people fail to choose the right investment tool for their desired goals. Today, there is a plethora of options for investment tools. One should consider going with the ELSS option if tax saving and creating a good corpus is on their agenda. Tax-saving ELSS is known as the best one.
To understand ELSS thoroughly, take a look at following points
- ELSS, i.e. equity-linked saving scheme is a type of equity mutual fund in which almost 80% of assets are invested in equity and equity related instrument. As being an open-ended fund, it does not have any limitations on the number of shares issued.
- ELSS funds are known to be the safest ventures when it comes to the cost impacts. It helps its investors to circulate their money from small, mid and large cap stocks.
- As ELSS is equity varied, so it comes with a lock-in period from starting of your investment date. Once, the lock-in period is over the scheme turns into an open-ended fund which means here an individual is eligible for the withdrawals. However, it is recommended to avoid doing these redemptions. To create a good corpus for your retirement, continue the investment without making any changes.
- Invest every year for about five years before your retirement period. Thus, in this way, it will help you to create a sufficient amount through which you can secure your retired life.
- An ELSS scheme offers multiple tax benefits. You can invest up to Rs. 1.5 lakh which is the tax-free amount as it comes under Section 80C of the Income Tax Act. The dividends which are earned on this scheme are tax-free. In this way, ELSS funds provide you triple tax exemptions.
Features of ELSS–
- It offers the benefit of having the shortest lock-in period which is of three years which proves to be the convenient one.
- You can start the investment with a mere amount, i.e. from RS 500 also.
- It doesn’t hold any maturity date like the other tax-saving investment tools such as PPF, term deposits etc. You are free to keep your ELSS investment as long as you wish to.
- You can also carry out your investment with the help of SIP mode.
With all these key features and its benefits, ELSS proves to be one of the useful investment vehicles for the ones who are looking upon saving tax and on the other hand creating a good corpus for the future life.