How to invest in ELSS Mutual Funds?

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Equity Linked Savings Scheme (ELSS) or tax saving funds refers to Mutual Fund investment schemes that enable you to save income tax. According to Section 80 C of The Income Tax Act, taxpayers are allowed to invest up to INR 1.5 Lakhs in specific securities and claim it as a deduction from their taxable income. Some of the approved investment avenues under section 80C of the income tax act 1961 includes ELSS, PPF, postal savings like NSC, NPS etc.

ELSS are basically equity-oriented mutual fund schemes, thus, they come with higher volatility and risks as compared to a other tax-saving avenues. ELSS returns are purely based on performance of equity markets unlike Tax saving FDs, thus the opportunity of returns with ELSS can be higher than other avenues as well.

Features of ELSS Funds

  • You can avail a tax deduction of up to Rs. 1,50,000 per year under Section 80 C of the Income Tax Act.
  • ELSS funds are a perfect blend of twin benefits, i.e. tax deductions and wealth creation.
  • ELSS portfolio mostly consists of equities while they have some exposure towards fixed-income securities too.
  • ELSS funds come with a lock-in period of three years
  • There is no upper limit or ceiling to invest in ELSS. You can invest any amount that you desire to invest

How to invest in ELSS Mutual Funds?

It is possible to invest in ELSS the same way as one invests in mutual funds. One of the easiest methods to invest in ELSS is through an Online Investment Services Account where you can either invest lumpsum or by way of Systematic Investment Plans (SIPs).

An investor can make the investment either offline or online.

Offline Investment- One can contact a mutual fund distributor who can help in form filling and also guide on how to invest in ELSS funds. The distributor will further collect investment cheques and deposit them with the mutual fund company office and guide you on selecting the best ELSS mutual fund schemes. Also, one can download the form from the AMC website and can submit by himself only at the AMC office.

Online Investment- To invest in ELSS mutual fund online, an investor can adopt any of the following methods-

  • Through the mutual fund (AMC) website
  • Through the Registrar and Share Transfer Agent (RTA) website
  • Through various mutual fund platforms

You can register on any of the websites above and you are generally asked to enter your mobile number, email ID and PAN. Once you enter your PAN, the website will verify whether you are KYC compliant or not. If you are KYC compliant, you can select the scheme in which you plan to invest and the option. You can either invest in the regular or direct plan with dividend payout or growth option. Based on your need and availability of funds, you can decide whether you want to invest via SIP or make a lumpsum investment.

Investing via an SIP is recommended when you are not willing to take higher risk. When you invest via an SIP, you can avail the opportunity of investing in a fund across market cycles. Since by way of SIP you invest in the market at different levels so there is a possibility that when the markets are bearish, you purchase more units while you purchase lesser units when the markets are bullish. Hence, over time, your price of purchase of fund units gets averaged out and happens to be on a lower side. You can benefit when the markets rise and realize higher capital gains on redemption.

Invest in the most popular funds handpicked by the experts at mastertrust. Learn the art of investing in mutual funds online, tailored well for first-time investors. Get advice backed by knowledge on the best mutual funds in India. If you are seeking a good tax-saving investment option, ELSS is the right mode for you. Contact us today to invest in the best ELSS schemes.