A Guide to Equity Linked Savings Scheme (ELSS)
Equity Linked Savings Scheme (ELSS) is a diversified equity mutual fund that offers tax deduction benefits under Section 80C of the Income Tax Act. It is popular among young investors because it combines the power of equity investing with tax savings.
Features of ELSS
ELSS funds invest at least 80% of their assets in equity and equity-related instruments. They have a mandatory lock-in period of 3 years from the date of investment. You can invest in ELSS either via a lump sum or through a Systematic Investment Plan (SIP).
Why Invest in ELSS?
- Shortest Lock-in: Compared to PPF (15 years) or Tax-Saving FDs (5 years), ELSS has only a 3-year lock-in.
- Inflation-Beating Returns: Because of its equity exposure, ELSS offers the potential for high returns over the long term.
- Professional Management: The portfolio is managed by professional fund managers who pick promising stocks.
