raaman
Valued Contributor
Is ELSS a secure way to make savings?
ELSS (Equity Linked Savings Scheme) is a type of mutual fund that provides tax benefits under Section 80C of the Income Tax Act, India, while investing primarily in equities or stocks.
In general, ELSS funds are considered to be riskier than other tax-saving investment options in India such as fixed deposits or government bonds, as they are linked to the stock market fluctuations, and can be affected by market volatility.
However, over the long term, investments in equity schemes tend to provide higher returns than fixed income investments. ELSS funds have a lock-in period of three years, which means that investors cannot withdraw their investment before the end of the three-year period. This feature is good since it can help in avoiding knee-jerk reactions to market fluctuations and encourages long-term investing among investors.
Therefore, an ELSS type of mutual fund can be a good investment option for individuals who are willing to take some risk for higher returns over the long term period and have a tolerance for higher risk. At the same time, investors should carefully consider their financial goals, and risk tolerance before investing in any scheme, including the ELSS, and should consult with a financial advisor if needed.
ELSS (Equity Linked Savings Scheme) is a type of mutual fund that provides tax benefits under Section 80C of the Income Tax Act, India, while investing primarily in equities or stocks.
In general, ELSS funds are considered to be riskier than other tax-saving investment options in India such as fixed deposits or government bonds, as they are linked to the stock market fluctuations, and can be affected by market volatility.
However, over the long term, investments in equity schemes tend to provide higher returns than fixed income investments. ELSS funds have a lock-in period of three years, which means that investors cannot withdraw their investment before the end of the three-year period. This feature is good since it can help in avoiding knee-jerk reactions to market fluctuations and encourages long-term investing among investors.
Therefore, an ELSS type of mutual fund can be a good investment option for individuals who are willing to take some risk for higher returns over the long term period and have a tolerance for higher risk. At the same time, investors should carefully consider their financial goals, and risk tolerance before investing in any scheme, including the ELSS, and should consult with a financial advisor if needed.
