Benefits of ELSS Mutual Fund and Why you Should Invest in it

14 February, 2023

Today there are plenty of investment options to choose from. Creating a portfolio that serves your financial needs can be a bit overwhelming when you are so spoilt for choice. However, Equity-Linked Savings Schemes (ELSS) allow you to earn sizeable returns while providing tax-saving benefits as well. As you prepare for the New Year, take the steps necessary to revamp your financial portfolio. Learn more about how ELSS Mutual Funds are a great investment option for you to consider as you step into the New Year.

What are ELSS Funds?

ELSS is a type of Mutual Fund wherein a professional fund manager with the requisite experience invests in various equity or debt instruments on your behalf. The fund manager collects investments made by various investors, and this entire pool of money is invested primarily across multiple shortlisted stocks on the exchange.

Why Should You Invest in ELSS in 2023?

To understand why it is an excellent investment option for the New Year, we have to look at the benefits of ELSS Mutual Funds. They are as follows:

• Wealth Creation:
  
  Firstly, ELSS enables you to invest in the equities market for the longer term. By locking in your finds for a minimum of three years, they allow you to enjoy a potentially higher growth rate than other debt-based investment options. ELSS may be the way to go if you want to grow your wealth in the upcoming year.
  
  

• Tax Benefits:
  
  When you invest in ELSS, you can avail of tax benefits as per Section 80C of the Income Tax Act, 1961. You can claim deductions up to ₹1.5 lakhs from your taxable income.
  
  

• Lock-in Period:
  
  While investing in ELSS means you have to deal with a lock-in period, it is relatively short compared to other tax-saving investment options. With ELSS, you only have to lock in your investment for three years and can also invest monthly via a Systematic Investment Plan (SIP).
  
  

Which are the Top ELSS Funds According to the Returns Offered?

If you are considering investing in ELSS, you should factor in the potential risk versus the returns. There are other factors that also come into play. They are as follows:

Performance History: While picking the right ELSS funds, you can consider performance history, though past performance does not necessarily indicate what will happen in the future, it can provide some benchmark. You can take a look at the last 3, 5, or 10 years' performance to make an informed decision.

Expense Ratio: The Expense Ratio showcases the percentage of your investment that goes towards managing the fund’s operational costs. A lower expense ratio indicates that less money goes into maintaining the fund, and your earnings have a better chance to increase thanks to the benefit of compounding.

Take the New Year as a chance to create a diverse portfolio that can support your financial requirements over the long run. To easily invest in various types of debt and equity instruments, you can count on the HDFC Bank Demat Account. With Free Demat AMC for First Year and Zero paperwork, it takes less than 10 minutes to set up a Demat Account at HDFC Bank.

Click here to open your Demat Account instantly!

Eager to learn about Why You Should Invest In Equity Mutual Fund? Visit Here.

*Terms and conditions apply. This is an information communication from HDFC Bank and should not be considered as a suggestion for investment. Investments in securities market are subject to market risks, read all the related documents carefully before investing.

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Tax benefits are subject to changes in tax laws. Please contact your tax consultant for an exact calculation of your tax liabilities.