Best ELSS Fund
The long term benefits of investing in Equity Linked Saving Schemes
For any and every individual who is eager to avail of tax benefits and growth, the Equity Linked Savings Schemes (ELSS) Mutual Funds are the ideal investment.
ELSS Mutual Fund schemes are open-ended funds and involve the investments of your money primarily into Equity. These are high-risk schemes and dependent on the changing face of the economy. Easy to invest in (minimum investment of Rs 500 per month), your money gets locked-in for a time frame spanning three years. You are entitled to tax exemption on both, your investment and also the maturity sum at the end of three years. Your money is managed by highly skilled financial experts. Despite the element of high risks, if you maintain your investments for 5-10 years, the returns are higher than those promised by any other investment scheme.
ELSS Funds constitute two kinds of investments i.e. Growth scheme and Dividend Payout / Reinvestment scheme.
Growth Scheme - During the entire tenure of your investment, you don’t receive any dividend. The total amount is paid at the end of the said tenure based on the NAV of the funds at that point of time. This is ideal for investors who are interested in a sizeable capital growth and are willing to invest for a long term.
Dividend Payout – One of the outstanding features of investing in ELSS Mutual Funds is that they offer you a Dividend Payout option. So while your investments stay locked-in for the agreed upon time-frame, you stand to enjoy some gains through this offering. This is ideal for investors who have a need to earn from their investments at regular intervals. Income earned on the investment is given to the investor in the form of dividend. This is tax free but dividends are paid only when the specific Fund is performing positively.
Reinvestment – When specific Funds declare dividends, you can reinvest the same into the same fund. This is considered as a fresh investment and can be claimed as tax deduction by the investor.
Some of the best ELSS Funds to invest in (based on their performance of the past 5 years) are viz;
- Axis Long Term Equity Fund (Growth)
- Birla Sun Life Tax Relief ’96 (Growth)
- Franklin India Tax Shield (Growth)
- BNP Paribas Long Term Equity (Growth)
- Religare Invesco Tax Plan (Growth)