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ELSS
ELSS FUNDS
ELSS (Equity Linked Savings Scheme) funds are a type of mutual fund that primarily invests in equity shares of companies with a view to generating long-term capital appreciation for investors. ELSS funds are also known for their tax-saving benefits, as they qualify for a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act, 1961.
ELSS funds are ideal for investors who are willing to take risks in order to achieve long-term capital appreciation. They have a lock-in period of three years, which means that investors cannot redeem their investment before the completion of three years. This lock-in period helps investors stay invested in the scheme for a longer duration, which can help them reap the benefits of compounding.
One of the key benefits of investing in ELSS funds is that they offer tax benefits. ELSS funds qualify for a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act. This makes them an ideal investment option for investors who are looking to save on their taxes while also generating long-term capital appreciation.
Another advantage of ELSS funds is that they offer the potential for higher returns compared to other tax-saving investment options like Public Provident Fund (PPF) and National Savings Certificate (NSC). Since ELSS funds primarily invest in equity shares, they have the potential to generate higher returns in the long run.
However, it is important to note that ELSS funds are subject to market risks and investors should be prepared to bear the volatility associated with equity investments. It is also important to choose the right ELSS fund based on factors like the fund's past performance, the fund manager's track record, the fund's expense ratio, and the fund's investment strategy.
CONCLUSION
IELSS funds are a good investment option for investors who are willing to take risks in order to generate long-term capital appreciation and save on their taxes. However, investors should carefully evaluate their investment goals and risk appetite before investing in ELSS funds.
