One of the most popular investment avenues, mutual funds promise to provide long-term inflation-beating returns that help you build a generous corpus. Of the plethora of investment products available today, Equity Linked Savings Schemes (ELSS) of mutual funds achieves twin retirement planning and tax savings goals. If this piques your interest, let’s look at how ELSS can help you fund your retirement and save tax.
1. Consistent and easy investment
With the availability of mutual funds online, you can quickly and easily begin investing in ELSS funds. With ELSS, you can choose to invest a lump sum amount or systematically invest monthly or as frequently as you like through SIP. SIP brings in the discipline of investing and takes away the risk of timing the markets. The monthly investment route helps you put away a comfortable sum regularly, which adds to your corpus in the long term without denting month-to-month expenses. While you can put away as little as INR 500, there’s no upper limit. You may also increase or decrease the amount you invest based on your financial goals. With time, your ELSS fund will grow, and by the time you hit retirement, you’ll have a sizable corpus you can rely on.
2. Tax benefits
Investing in mutual funds in India like ELSS helps build a corpus for post-retirement life and offers a solution to your tax problems. ELSS allows you to avail of a tax deduction on your investments under Section 80C of the Income Tax Act of up to INR 1.5 lakh. You also don’t have to worry about paying long-term capital gains tax. It’s like a two-in-one benefit – you can watch your money grow while also saving a chunk with tax deductions.
Compared to other plans like pension plans, mutual funds are extremely flexible. At any point in time, they don’t have any restrictions on how much you invest, when you invest, or partial or full withdrawal. Based on your needs, capacity, or financial goal, you can change to another mutual fund as and when you like.
As you know, the mutual funds market is multidirectional – it can go up and down. As an investor, you don’t want your hard-earned money to face any risks. Hence, funds like ELSS, which typically invest in an array of stocks and sectors, offer you plenty of diversification, so you make better returns on your investment. Furthermore, ELSS funds don’t need day-to-day tracking, so you needn’t hit a pause on your daily routine or activities. You can monitor your investments periodically.
You want income for your post-retirement life so you can continue living the lifestyle you want, and ELSS helps with just that. With the help of DIY or online Mutual Funds investment apps like Moneyfy you can easily plan for a secure future and minimize the risks involved.