Investing in ELSS (Equity-Linked Saving Scheme) mutual funds is a smart way to save tax and generate long-term wealth. ELSS mutual funds are equity-oriented schemes that come with a lock-in period of three years, which means investors cannot redeem their investment before the completion of three years. ELSS funds invest primarily in equities and equity-related securities, which offer higher returns than traditional tax-saving instruments like PPF, NSC, FD, etc. Here are the best ELSS mutual funds to invest in 2022.
Axis Long Term Equity Fund
The Axis Long Term Equity Fund is a top-performing ELSS mutual fund that has delivered an impressive return of 20.7% over the past three years. The fund’s portfolio is diversified across various sectors, with a focus on large-cap companies. The fund has a three-year lock-in period, and investors can invest a minimum of Rs. 500 per month or Rs. 1,000 as a lump sum.
Aditya Birla Sun Life Tax Relief 96 Fund
The Aditya Birla Sun Life Tax Relief 96 Fund is one of the most popular ELSS mutual funds in India, with a track record of consistently delivering impressive returns. The fund’s portfolio is primarily focused on large-cap and mid-cap stocks, with a diversified sector allocation. The fund has a three-year lock-in period, and investors can invest a minimum of Rs. 500 per month or Rs. 1,000 as a lump sum.
Mirae Asset Tax Saver Fund
The Mirae Asset Tax Saver Fund is a relatively new entrant in the ELSS mutual fund space, but it has quickly gained popularity due to its impressive track record. The fund’s portfolio is focused on high-quality stocks across various sectors, with a blend of large-cap and mid-cap companies. The fund has a three-year lock-in period, and investors can invest a minimum of Rs. 500 per month or Rs. 1,000 as a lump sum.
Canara Robeco Equity Tax Saver Fund
The Canara Robeco Equity Tax Saver Fund is a well-diversified ELSS mutual fund that invests primarily in large-cap and mid-cap companies. The fund’s portfolio is diversified across various sectors, with a focus on companies with strong fundamentals and growth potential. The fund has a three-year lock-in period, and investors can invest a minimum of Rs. 500 per month or Rs. 1,000 as a lump sum.
DSP Tax Saver Fund
The DSP Tax Saver Fund is a top-performing ELSS mutual fund that has consistently delivered impressive returns over the past few years. The fund’s portfolio is diversified across various sectors, with a focus on high-quality large-cap and mid-cap companies. The fund has a three-year lock-in period, and investors can invest a minimum of Rs. 500 per month or Rs. 1,000 as a lump sum.
Conclusion
Investing in ELSS mutual funds is a smart way to save tax and generate long-term wealth. The above-listed funds have a proven track record of delivering impressive returns over the past few years and are expected to perform well in 2022. However, it is always advisable to consult a financial advisor before making any investment decisions. Also, investors must choose funds based on their risk appetite and investment horizon. Happy investing!
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Frequently Asked Questions (FAQs)
Q.What are ELSS mutual funds?
ELSS mutual funds are equity-oriented schemes that allow investors to save tax and generate long-term wealth. These funds invest primarily in equities and equity-related securities and come with a lock-in period of three years. They offer tax benefits under Section 80C of the Income Tax Act, making them an attractive investment option for tax-saving purposes.
Q.What is the lock-in period for ELSS mutual funds?
The lock-in period for ELSS mutual funds is three years. This means that investors cannot redeem their investment before the completion of three years.
Q.What are the tax benefits of investing in ELSS mutual funds?
Investing in ELSS mutual funds offers tax benefits under Section 80C of the Income Tax Act. An investor can claim a deduction of up to Rs. 1.5 lakhs in a financial year by investing in ELSS funds. The amount invested in ELSS funds is deducted from the investor’s gross total income, thereby reducing the taxable income and resulting in tax savings.
Q.What is the minimum investment amount for ELSS mutual funds?
The minimum investment amount for ELSS mutual funds varies from fund to fund. Generally, investors can invest a minimum of Rs. 500 per month or Rs. 1,000 as a lump sum.
Q.Are ELSS mutual funds risky?
ELSS mutual funds are equity-oriented schemes and are, therefore, subject to market risks. The returns on ELSS funds are dependent on the performance of the stock market. However, investing in ELSS mutual funds through the SIP (Systematic Investment Plan) route can help mitigate the risk by averaging out the cost of investment over a period of time.
Q.Can I withdraw my investment before the completion of the lock-in period?
No, investors cannot withdraw their investment before the completion of the three-year lock-in period. However, after the lock-in period, investors can redeem their investment or continue holding it for further growth.
Q.How should I choose the best ELSS mutual fund to invest in?
Investors must consider various factors like fund performance, fund manager’s track record, portfolio diversification, risk-return profile, and expense ratio while choosing the best ELSS mutual fund to invest in. It is advisable to consult a financial advisor before making any investment decisions.
