Invest In ELSS: Enjoy Dual Benefits

There are hardly any investment instruments other than ELSS that give you the benefit of investment in equity as well as tax-savings.It may be argued that ULIPs and the National Pension Scheme (NPS) can also achieve this twin objective. Nevertheless, there are some limitations in terms of flexibility and lock-in period with these instruments, which makes ELSS stand out as a noteworthy tax-saving instrument. ELSS has the lowest lock-in period. Other investment options eligible for Section 80C deductions like ULIP, NSC or tax-saving fixed deposits come with a lock-in period of five years. PPF has a lock-in period of 15 years. In the case of NPS there are stricter guidelines if you want exit earlier or else you can withdraw only after 60 years. Besides, returns offered by ELSS are among the best.

Though they may be a bit volatile and risky when compared to some of the fixed income securities, the three-year lock-in period take care of most of the volatility. Learn more about the benefits of ELSS in our cover story that explains why and how ELSS remains a superior tax-saving instrument. It also suggests the five best ELSS’ of which you can choose any two depending on your risk appetite. Although it is now already the start of the fourth quarter, our suggestion is that you should plan your tax-saving investments in advance and spread them across the year to manage cash flows more efficiently. Meanwhile, wishing you and your family a very Happy New Year. We hope the year ahead will lead to far better financial decisions.

SHASHIKANT