Many retail investors often ask their financial planners to come up with early methods of saving income tax instead of waiting till the last minute. In response, one of the recommendations from tax advisors is to invest in tax saving mutual funds or ELSS funds through SIPs or STPs.
In this blog, you will discover how to seize the different tax-saving opportunities and aim to achieve returns by investing in Tata ELSS Fund. It may be noted that tax savings can be availed only under the old regime of Income Tax Act.
Top 3 Reasons to Invest in ELSS Tax Saver Fund
Here are the key reasons to invest in tax saving mutual funds like Tata ELSS Fund:
Equity-based
This fund is at least 80% equity-focused which creates an opportunity for potential growth. Moreover, it provides room for risk diversification and are highly transparent investments.
Flexible Investment
The Tata ELSS Fund allows you to begin your investment journey with a minimum SIP amount of Rs. 500. Also, you can opt for a lump sum investment as low as Rs. 500.
Lock-in Period
You will need to wait for 3 years until you can access your funds, which accounts for one of the shortest lock-in periods among other types of Section 80C investments.
This ELSS fund can be convenient for first-time investors who may feel overwhelmed by short-term market fluctuations. Compared to FDs, this fund offers the potential for higher returns and taxable profits (after considering tax exemptions). However, it must be noted that Investments are subject to very high risk vis-à-vis FDs.
What Sets ELSS Fund Apart?
ELSS mutual funds, including Tata ELSS Fund have two major advantages:
- The Investment Philosophy Is Well-defined: In this fund, you will discover stocks of businesses that have proven market track record in their product segment. These companies have shown consistency in generating revenues in the last few years.
- Investors Can Leverage Re-Rating Opportunities: Currently, you will find some stocks in this ELSS mutual fund that are undervalued due to various reasons. Once these companies rebound from policy changes, unitholders can expect better valuations.
Who Can Consider Investing?
The Tata ELSS Fund is ideal for long-term growth seekers.
As this fund is classified as very high-risk, you need to be comfortable with potential volatility. Moreover, given that the fund's majority of the allocation goes to companies under financial services, the automobile industry, and IT, you must be willing to stay invested in these areas as a potential long-term strategy.
An ELSS tax saver fund like the Tata ELSS Fund invests heavily in equities, aiming for significant growth. However, this also means it carries a higher risk of fluctuations in value. Thus, if you are choosing this fund over other tax saving instruments under Section 80 C, you need to develop the mindset of tolerating high volatility. However, it has the potential to be rewarding in the long run.
Scheme Details
- Scheme Name: Tata ELSS Fund
- Scheme Category: Equity Schemes – ELSS
- Investment Objective: The investment objective of the Scheme is to provide medium to long term capital gains along with income tax relief to its Unitholders, while at all times emphasising the importance of capital appreciation. However, there is no assurance or guarantee that the investment objective of the Scheme will be achieved. The scheme does not assure or guarantee any returns.
- Type of Scheme: Tata ELSS Fund is an open-ended equity linked saving scheme with a statutory lock in of 3 years and tax benefit.
- Fund Managers: Tejas Gutka, Sailesh Jain
- Benchmark: NIFTY 500 Total Return Index
- Minimum Application & Additional Amount: Rs. 500 and in multiples of Rs. 500/- thereafter
- Exit Load: Nil, due to compulsory lock-in period of 3 years
This product is suitable for investors who are seeking*:
| Scheme Risk-O-Meter | Benchmark Risk-O-Meter | |
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| *Investors should consult their financial advisers if in doubt about whether the product is suitable for them | ||
| (It may be noted that risk-o-meter specified above is based on internal assessment. The same shall be updated as per provision no. 17.4.1.i of SEBI Master Circular on Mutual Fund dated May 19, 2023, on Product labelling in mutual fund schemes on ongoing basis). | ||
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.