Parameters For Selecting an ELSS Fund

We all aim to grow wealth but at the same time, we need to keep a tab on our expenditure so that we can earn more and spend less. But one expenditure is inevitable, the taxes. While mutual fund may help you grow wealth, it provides investors with other benefits too. For example, mutual funds help investors diversify their investment portfolio while reducing the risk of incurring higher losses at all once. Equity Linked Saving Scheme or ELSS comes with tax benefits worth Rs. 46,800 with an investment of up to Rs. 1.5 lakh annually. But before opting for any mutual fund scheme, every investor needs to keep his or her financial goals, risk appetite and current financial position in mind.

Let us take a look at some of the parameters that investors should look at before choosing an ELSS scheme that can help them attain their financial objectives:

Primary investment objective: Before choosing any type of investment, an investor needs to first determine his/her financial goal before narrowing down on a strategy to achieve that goal. If you are an investor who wants to invest in the equity market but don’t know how to go about it, then ELSS funds can be one of the way to get exposure to equity markets. You can invest in an ELSS scheme either though SIP fund you should consider its long term performance. So while checking a fund’s performance consider its consistency over the past 3 to 5 years, rather than just checking its past one-year performance.

Risk involved: As ELSS is an equity-related fund, there is moderately high risk involved. As an investor, you should identify your risk appetite before jumping to conclusions as to how much amount you want to invest. Even though ELSS offers a chance fetching better gains as compared to other tax-saving investment schemes, it comes with a fair amount of risk too.

Now that you are aware of what ELSS is and how it functions, planning on some investment? let us introduce you to Axis Long Term Equity Fund (An open ended equity linked saving scheme with a statutory lock in of 3 years and tax benefit) So if you want to save tax while aiming to build wealth, invest in Axis Long Term Equity Fund now.

*As per the present tax laws, eligible investors (individual/HUF) are entitled to deduction from their gross income of the amount invested in Equity Linked Saving Scheme (ELSS) up to Rs.1.5 lakhs (along with other prescribed investments) under section 80C of the Income Tax Act, 1961. Tax savings of Rs. 46,800 mentioned above is calculated for the highest income tax slab. Investors are advised to consult his/her own Tax Consultant with respect to the specific amount of tax and other implications arising out of his/her participation in ELSS.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.