If you are a prudent investor then you must already be investing in equity linked savings scheme or ELSS funds. But i you are more knowledgeable you must be doing your own research with ELSS. So for mutual funds investors let me present you my ELSS Funds 2018 Guide.
1) Different Schemes, Different Investment Strategy:
You can get up to Rs. 1,50,000 rebate in the income tax in al types of equity-linked funds but all equity-linked funds are not same because:
- They are investing in different kind of instruments.
- Fund structure is different.
- The investment objective is different.
- The term of the funds are different.
2) Different Types Of ELSS:
- Small Cap Equity Funds: Relatively new companies, high risk, high return.
- Mid Cap Equity Funds: Mid-sized companies, less risk than the small-cap funds, a higher return than the large-cap funds.
- Large Cap Equity Funds: Established blue-chip companies with a good track record, less risk than small and mid-cap funds, best for buy and hold strategy.
3) ELSS Funds 2018 Guide To A Crorepati:
If you add ginger to tea, it will add to the taste as well as it will cure a common cough. Similarly investing in ELSS will give an investor the opportunity to save up to Rs. 1,50,000 in income tax under section 80C and also it will increase the wealth and help to build a retirement kitty.
If an investor Rs. 1,50,000 yearly in equity-linked funds for 30 years and if he gets average 14% returns per year, his total ending capital will be Rs. 5.35 crores.
So you can save Rs. 1.5 Lacs every year in tax plus can retire with few Crores by investing in equity-linked mutual funds.
4) ELSS Funds 2018 Guide – Investment Method:
- Either invest Rs. 1,50,000 in the ELSS in one shot.
- Or invest Rs. 12,500 every month through systematic investment plans.
- These funds have a lock-in period of 3 years between which you can not sell your fund. Many investors think lock-in period as the maturity period and they often sell their fund after the lock-in period is over. These investors lose the benefit of long-term wealth creation. So hold your fund for a longer term for a higher return.
5) Few Factors Affecting Your Return:
- The fund manager’s experience
- Expense ratio
- The structure of the fund
As the taxing time is approaching, you must keep ELSS as your best option to invest Rs. 1,50,000 lump sum. If you are already investing through SIP, you need to continue the same. If you don’t know how to invest in mutual funds online, you can check out Zerodha Coin to invest in direct mutual funds online.
Indrajit is a professional blogger and trading system developer. Amibroker expert, Wordpress expert, SEO expert and stock market analyst.Trading since 2002, he has started the journey of StockManiacs.net on 2008. He follows Indian and world stock markets closely.