A large number of people these days are opting for the ELSS funds as their tax saving options. The ELSS mutual funds are a promising option of tax saving that comes with a large number of well-diversified options. This is an option that can include and occupy a large portion of your investments in equity related securities.
These ELSS mutual funds offer you an easy tax advantage that can also offer you a high returns percentage in the future. By investing in ELSS mutual funds you can exempt up to 1.5 lakhs as per the Section 80C mentioned in the Income Tax Act passed in the year 1961.
However, there are a few points that must be borne in mind before you invest in ELSS funds.
Market Knowledge – This is one of the most important aspects that must be borne in kind. Mutual funds are open to market risks. Hence a proper assessment of the scheme, its various features, strengths and benefits and also understanding the pulse of the market is very important. These are some of the things that can help you to get better returns from the scheme.
Lock-In Period – You must also assess the lock-in period of the scheme very carefully. This is one of the most important aspects of the mutual fund. The lock-in period is the time when you cannot sell off the fund or the scheme. This is a mandatory period and has to be observed by all. Hence you must know about the duration of the locking period before you invest in any type of mutual fund even the ELSS ones.
Risks Involved – Risk is the other name of mutual funds. This is a disclaimer that also goes with the advertisement and promotion of all types of mutual funds schemes. You must assess the risk involved very carefully before you invest in any type of mutual funds including the ELSS funds. In this perspective, it is always better to take the advice of an expert before you invest in any type of mutual funds. This s one of the best ways through which you can avoid the pitfalls and can attain the maximum benefit out of your investments.
Returns – At the time of the investment making make a good assessment of the kind of returns that you can expect from the investment. This is one of the very important parameters that must be assessed in a proper manner at the time of making the investment. In this context, it must be said that this is something that can be done best by a professional expert of the domain.
Exemption Limit – Different mutual funds provides different limits of exemption. This is yet again a facet that must be assessed closely at the time of making the investment.
On a final note, it can be said that mutual funds are a matter subject to market risk. Hence all documents must be read carefully. Take your time and asses all the parameters closely before you go for the final decision.