When it comes to investing, there are many options on the market. One such option is an equity-linked savings scheme (ELSS) fund. The ELS Fund is a diversified equity mutual fund that invests primarily in the stock market and has a fixed term of three years. Investing in ELSS funds offers several benefits, including tax benefits, high returns, and diversification. This article will discuss the benefits of investing in ELSS funds, focusing on SBI ELSS funds and 5paisa.
Tax Benefits
One of the key benefits of investing in the ELS is the tax benefits it provides. ELS funds are eligible for a tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. This means that if you invest up to Rs 1.5 lakh in an ELSS fund, you can claim a tax deduction on the amount invested in the fiscal year in which you invest.The SBI ELSS fund and 5paisa offer tax benefits to their investors, making it an attractive option for those looking to save on taxes.
High Returns
Another benefit of investing in an ELSS fund is the potential for high returns. Since ELSS funds primarily invest in equity, they have the potential to provide higher returns compared to other fixed-income investment options like Fixed Deposits or Public Provident Fund (PPF). According to historical data, the average returns from ELSS funds have been around 15%, making it a lucrative investment option for investors. The SBI ELSS fund and 5paisa are known to provide higher returns, making them a popular choice for investors.
Diversification
Investing in ELSS also offers the benefits of diversification. ELSS funds spread risk across different market segments by investing in large, mid-cap and small-cap stocks. This diversification helps reduce the overall risk of your investment portfolio, making it a safer investment option. The SBI ELS fund and 5paisa offer investors the benefits of diversification, making them a good choice for those looking for a well-diversified portfolio.
Short Fixed Term
Unlike other tax-saving investment options, ELSS funds have the shortest fixed term of 3 years. This means that your money is locked for a relatively short period of time, giving you the opportunity to review your investment after 3 years.
Structured Investment Plan (SIP)
The ELSS Fund allows investors to systematically invest through SIP. This means that you can invest a fixed amount each month or quarter, which helps you to invest in moderation.
Higher Return Potential
Because the ELSS Fund invests in stocks, it can generate higher returns than other tax-saving options. However, it should be noted that investing in stocks carries a higher risk.
Professional Management
ELSS funds are managed by experienced fund managers who select stocks to invest in. You will also have access to in-depth research and analysis to help you make informed investment decisions.
Conclusion
In conclusion, investing in ELSS is a smart choice for those looking to save tax, earn higher returns and diversify their portfolio. SBI ELSS fund and 5paisa are two popular options for those looking to invest in ELSS funds. These two funds are good choices for investors as they offer tax incentives, high returns and diversification. Before investing, it is important to understand your risk appetite and investment objectives in order to make an informed decision.
