ELSS Part II: which schemes should you invest in?

TomorrowMakers ™

ELSS Part II: which schemes should you invest in?

17 March 2016
ELSS is one of the best investment options especially for young families to meet the twin goals of tax benefit and long term wealth creation. Here’s how to monitor and manage it
 
 

Which ELSS schemes should you consider?

When you select an ELSS scheme, check the performance record of the scheme and also the pedigree of the Asset Management Company (AMC) which manages the scheme. One can find detailed information about ELSS schemes on portals such as Value Research and Morningstar. Below is a table listing some of the top rated ELSS schemes as per Value research as on March 08, 2016:

However, rather than investing blindly as per the suggestions on these online portals, you should treat these only as a starting point for your own research. Also remember the cardinal rule that past performance may not be sustained in future. If you are investing a considerable amount in an ELSS scheme (say Rs. 1 lakh), it is advisable to split it between atleast two schemes to reduce the fund manager risk.

Related: Equity Linked Savings Schemes: High returns tax savings

How to invest & make the most out of your ELSS

Once you have shortlisted the scheme(s) in which you wish to invest, you need to complete your Know Your Customer (KYC) verification. As per a recent update by the regulatory body SEBI, if you have an Aadhar number, you can even invest upto Rs. 50,000 without undergoing KYC verification. For doing KYC, you can visit the investor service centre of the AMC and along with the application for the scheme, you can fill up the KYC form as well and submit it over the counter. If you are already KYC compliant, you can invest online from the comfort of your home/office on the website of the AMC.

If you are investing without the help of an agent, do consider opting for the “direct plan” as it will give you marginally better returns as compared to regular plan, given the lower expenses in such plans. Instead of choosing the “dividend” option, you can also go for the “growth” option.

After the 3-year lock in period is over, it is best not be in a rush to withdraw the money, since the equity markets are volatile in the short term. However, by having a minimum 10-year horizon, you can do well to stay put in the scheme and reap good returns in the long term.

Related: How and why to monitor your ULIPs after purchase

ELSS is one of the best investment options especially for young families to meet the twin goals of tax benefit and long term wealth creation. A small one-time effort for KYC and the right scheme selection can yield good rewards in terms of good long term returns.

 
Market Quotes by TradingView

Do you know how much industries contribute to the Indian GDP

POLL

 

MOST VIEWED CONTENT

How does GST impact your wallet?

How does GST impact your wallet?

Deemed as the biggest tax reform, what does GST have in store for your finances?

6 Documents that must be linked with your Aadhaar card

6 Documents that must be linked with your Aadhaar card

There are several documents you need to link to your Aadhaar card. Here’s what you must know about them.

Could GST make your dream home a reality?

Could GST make your dream home a reality?

Potential home buyers could be in for a treat post the GST rollout. So, what does the one-tax regime bring with it?

FAQs about fixed deposits

FAQs about fixed deposits

Need a crash course on opening a Fixed Deposit account? Here are some of the most asked questions regarding FDs.

Beware of these 6 fees when buying real estate [Infographic]

Beware of these 6 fees when buying real estate [Infographic]

Buying a home is a wonderful accomplishment. But it sometimes comes with hidden costs. Here's what you must know

Property inheritance: What you must know when making your will

Property inheritance: What you must know when making your will

A will is an essential document if you want to leave behind an inheritance. But do you know how to go about the procedure?

Identity checks to be mandatory for cash dealings of above Rs. 50,000

Identity checks to be mandatory for cash dealings of above Rs. 50,000

Banks and financial institution are now required to check IDs for cash transactions above Rs. 50,000. Here's what you need to know about the changes

boy

We would love to hear from you!

Question, comment or concern? Our contact form is the best way to get in touch. We will respond to you within 5 working days.

NEWSLETTER