What are Tax Saving Mutual Funds?
What are Tax Saving Mutual Funds?
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What are Tax Saving Mutual Funds?
What is Mutual Fund?
A mutual fund is a collection of stocks, bonds, or other securities owned by a group of investors and managed by a professional investment company. For an individual investor to have a diversified portfolio is difficult. But you can approach to mutual fund advisor and can invest into shares. Mutual funds have become very popular since they make individual investors invest in equity and debt securities easy.
When investors invest a particular amount of mutual funds, he becomes the unitholder of corresponding units. In turn, mutual funds invest unit holder’s money in stocks, bonds or other securities that earn interest or dividend. This money is distributed to unitholders.
1) Tax Benefit under Section 80C
Investments in ELSS are eligible for a tax deduction of up to Rs. 1.5 lakhs from your gross total income.
2) Lowest Lock-in Period
ELSS comes with a lock-in period of just 3 years which is very less in comparison to other schemes such as ULIP and PPF etc. Thus one can withdraw money under this scheme after 3 years.
3) Benefit from Equity Exposure
Since in this scheme money is invested in stock markets hence it serves as a good option for first-time investors to gain certain knowledge of the market.
4) Professionally managed
Such schemes are managed by fund managers who have good knowledge of stock markets and different sectors involved to ensure that it generates good returns for investors.
5) High returns
Investors can expect huge returns under this scheme as it comes with higher risk too and hence more the risk, the better would be the returns.
6) No Maturity Date
Most tax saving funds such as say PPF have a maturity period of 15 years. But in case of ELSS, there is no such fixed maturity date or period. One is allowed to continue with the investment as long as one wants.
