What is MUTUAL FUND ?
Mutual fund is generally defined as a scheme funded by individuals (pool of investors) together, which is managed by Professional Fund Manager.
Mutual Fund is an Ideal Investment platform for individuals who lack large chunks of investments, or those who neither have the knowledge or time to research the market but still want to invest and grow their hard earned Wealth.
There are variety of Mutual Fund schemes to choose from, classified into different investment objective. An investor can choose one that will fulfill his/her investment goal.
Mutual Funds are categorized into different offerings based on their Investment Objective i.e. those are
1) Equity Fund
2) Exchange Traded Funds
3) Fund of Funds
4) Overseas Fund
5) Fixed Income Fund / Monthly Income Fund
6) Retirement Solutions
7) Debt Fund / Gilt Fund
Coming back to our main objective of Tax Saving, lets see how ELSS (Equity Linked Savings Scheme) works. It is a Mutual Fund with an investment objective to save tax Under Section 80C of the Income Tax Act, 1961.
The Key Benefits of investing in ELSS (Equity Linked Savings Scheme) are given below…
1) Investment in ELSS IS eligible for Tax Deduction up to Rs 1.5 Lakhs.
2) Short lock in period of 3 Years.
3) Dividends and long-term capital gains are Tax Free.
Investment in ELSS need not be only Lumpsum but SIP (Systematic Investment Plan) is also an alternative for long term returns apart from 3years objective.
The most common mistake that people make is after Graduation their main focus is on earnings and increments. Yes Earning and Salary Increments are both equally important but neglecting Savings and Investments thus affecting long term planning.
When you realize the importance of Savings, Investments and Tax Planning its already too late and there are no sufficient funds to manage upcoming events i.e. Children’s planning, Child Education and their Marriage, Retirement etc.
Starting early Tax planning through SIP, its the best pocket friendly idea, One can also invest Lumpsum. Below are few images that explains the same…
Conclusion is that Lumpsum or SIP in ELSS not only helps to SAVE Tax but also Grow towards long term Goals and can be directed towards Retirement.
If your Age is 20,30 and 40 years away from RETIREMENT and you choose to Invest 10000 Rs. monthly SIP in ELSS with Estd. 12% annual growth, then your corpus is approximately 99 Lk., 3.53 Cr. and 11.88 Cr. respectively.
Try to diversify in 2-3 ELSS schemes to balance you portfolio and get exposer to varying market capitalization and diverse industries.
Happy Investing with Sai Sampada Investments your Trusted Partner for Investments.
