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ELSS- SAVE TAXES AS YOU CREATE LONG TERM WEALTH

A well recommended tax-saving investment needs to offer the finest combination of investment returns along with being a default tax-saver. One of the most useful instruments is Equity-Linked Savings Scheme (ELSS) which enables whittling down of tax liability under section 80C. ELSS Funds compulsorily lock-in funds for a period of 3 years but are pure play equity funds. Additionally, these enable deduction of the entire invested amount from the corpus taxable income. Furthermore, both returns and amount are non-taxable on redemption but only after the lock-in period of 3 years.
Returns are intrinsically tax free since by nature these are equity funds wherein by law long-term gains (i.e. returns after one year investments) are tax free for all kinds of equity fund investments.

Create wealth ELSS Funds

As a stand-alone too the ELSS would come close to being an ideal equity investment. By default, the lock in period of 3 years almost ensures a front running wealth creation. The principle of systematically investing over time becomes compulsory here due to the mandatory lock in period and the impact of compounding ensures generous returns. This easy approach is open to all investors as the quantum of SIP and has been reduced substantially. The low risk taker and the risk averse as well as the daring investors with huge risk appetite can plunge with impunity to invest in these kinds of funds. The risk takers will also get the same amount of returns after the first 3 years after which many risk can be taken. ELSS combines the benefit of wealth creation in the long term with tax-saving making ELSS an ideal instrument for wealth creation.

Advantage of ELSS fundsover all other instruments

Anyone seeking to save taxes has a plethora of alternatives. Yet, most tax savers are deprived of these wonderful tax saving instruments due to wrong decisions. Yet, individuals often opt for fixed deposits with sub-optimal returns as the inflation eats away in the absence of benefit of compounding returns. Insurance investments summarily deplete due to agent’s commission. This happens mostly as investors usually wakeup in the charged months of March with attentive risks of grabbing the seemingly best offers. The pressure of deadlines also allows them to be gulled easily by the advisers. Herd decisions are the norm with the consequence of subpar returns looming large.

The ideal investment decision is to plump for ELSS funds but after planning from much before. Without being hasty the best investments and ELSS funds become easy to choose. A fixed amount should be set aside for ELSS investments as is because salary-earners generally have fixed income and can generally plan it better. Its ideal tool for retirement planning as savings bank accounts will only erode it to next to nothingness. Savings are depleted at an unsavory rate due to the decline in the currency’s purchasing power as the prices rise on an average of about eight times in the average 25-year period through which a salaried employee saves.

ELSS could take care of the present needs as well. It is an ideal retirement planning tool as the risks of equity investment fall in the long term!

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