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ELSS: Tax Saving with a Hint of Goal Planning

ELSS: Tax Saving with a Hint of Goal Planning

When you think of the benefits of Equity Linked Savings Scheme (ELSS), the first thing that would come to your mind is saving taxes. But, did you know that ELSS offers three-pronged benefits-tax planning, equity-linked returns and long-term goal planning? There is much more to saving taxes in a tax saving investment. With a systematic approach to tax planning, you can realise the true potential of your investment.

Let's read more about ELSS:

While planning for your future, what appears as more achievable?

a) Managing a lump-sum, or
b) Filling the wish-tank bit-by-bit with funds, or
c) Having an option to choose both.

Tax saving through Equity Linked Savings Scheme (ELSS) offers all of these options. You can invest in ELSS through lump-sum as well as Systematic Investment Plan (SIP) route.

Let's see how ELSS tax saving can factor in your financial goal planning:

Long Term Planning:

Think long-term is the ideology that applies to equity investing.

ELSS, being an equity-based mutual fund, can provide long-term returns over and above inflation, considering a certain degree of risk. It is said that, in the long run, markets march forward. Moreover, if your goals are long term, you can give your investments time to grow over market cycles. Through early and effective financial planning, your tax-saving investments could bless you with sizeable corpus in the long term.

Wealth Creation is a continuous effort

Equities are known to offer higher returns. However, they are also associated with a greater degree of risk. While investing in direct equities might seem intimidating to investors, one can avail its benefits without having to select, track and manage their investments through ELSS.

Usually, wealth creation requires a long term time horizon. This period can be suitable for an equity-oriented investment to overcome the short-term volatility phase. Furthermore, the ELSS tax saving scheme can help you invest systematically as well as park surplus savings in the form of a Lump sum. Building wealth is a continuous effort.

Achieve Milestones

The ELSS tax saving route can also help in achieving milestones with various long-term goals. You have a better chance of staying put for long if you have a long-term financial plan attached to your tax-saving investments. The longer you wait, the more can be the compounded returns.

Sail through Choppy Markets

With the current pandemic situation and economic uncertainty, it is imperative to invest with foresight. ELSS tax saving through SIP route can help you average your investment cost over a while. This is especially beneficial in times like these when the markets are choppy. During uncertain times, ELSS tax saving can offer much-needed relief to investors through economic investments (you can invest a minimum of INR500 per month). There is a lock-in period of three years.

While financial planning is based on assumptions, taxes can be certain. The main aim of tax planning is tax liability minimisation, to which there is a limit. However, your goal planning options need not be limited.ELSS can help you expand the scope and grasp of your tax-saving goal with a hint of long-term financial planning.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully


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