Best Tax Saving ELSS Funds for the New Fiscal Year 2020-21
Looking to invest in Tax Linked Equity Savings Schemes (ELSS) in the upcoming fiscal year 2020-21? This guide is designed to help you make an informed decision about which ELSS funds are best suited for your investment needs, considering both tax benefits and long-term appreciation.
Understanding Tax Saving ELSS Schemes
ELSS funds offer an excellent opportunity for tax planning and long-term wealth accumulation. These funds provide tax benefits under Section 80C of the Income Tax Act, making them a popular choice among investors. When investing in ELSS, it is beneficial to seek professional advice to ensure you choose the right fund depending on your risk profile.
Top ELSS Funds to Consider
Mirae Asset Tax Saver Fund Axis Tax Saver Fund Birla SunLife Tax Saver Fund'96 Invesco India Tax Plan Axis Long Term Equity Fund Motilal Oswal Long Term Equity Fund Aditya Birla Sun Life Tax Relief 96 LT Tax Advantage HDFC Tax Saver Fund Reliance Tax Saver Fund Canara Robeco Equity Tax Saver FundWhen selecting an ELSS fund, it is important to consider several factors, including:
Whether you are considering a lumpsum investment or a Systematic Investment Plan (SIP) Your current tax liability Whether you are investing for the long-term appreciationELSS funds typically have a lock-in period of 3 years. For lumpsum investments, this means that you cannot withdraw the investment for 3 years from the date of investment. Each SIP instalment also has its own 3-year lock-in period.
Starting an Efficient SIP Strategy
To take advantage of market volatility, a strategic SIP approach can be effective. For instance, if you decide to start an SIP, we recommend investing rupees 12,500 per month for one year, ideally in April. This method helps in averaging out the investment, as each instalment is invested at a different market price, reducing the impact of market fluctuations. For detailed queries, do not hesitate to contact me directly.
Additional Resources and Insights
For comprehensive and up-to-date information on ELSS funds, consider visiting websites like or These platforms offer detailed information on various mutual funds, including performance history and management expertise.
Over the last four years, I have observed varying performance across different ELSS funds. Funds like Mirae Asset and Axis Long Term Equity Fund have historically shown better annual returns, around 12%, compared to others that offered around 6.5% to 8.0% annually. It's crucial to be aware that fund managers can manipulate returns, and investors might not always benefit as the first two years may see high returns (12% to 16%) followed by lower returns in subsequent years, as exemplified by the Reliance Tax Saver Fund's underperformance.
Choosing the right ELSS fund is a mix of risk assessment, understanding your investment horizon, and considering performance history. Professional advice can be invaluable in navigating this landscape, ensuring you achieve optimal tax savings and long-term growth.