Here is an update on our suggested equity-linked saving schemes (ELSS) or best tax saver mutual fund schemes. There has been no change in the recommendation list for this month. It means that you can continue investing in these taxes-saving schemes and hold on to your assets.
In the last one year, the ELSS category is in the unfavorable sector, returns yields of -7.92%. However, you should not be too worried about this short term results. If you have a higher risk tolerance and long-term financial objective, you may consider investing in ELSS funds to save on taxes. Investments in ELSS funds are eligible under Section 80C of the Income Tax Act for tax deductions of up to Rs 1.5 lakh.
Our two suggested schemes of Aditya Birla Sun Life Tax Relief 96 and L&T Tax Advantage Fund, a term on short-term underperformance. Both these schemes have high mid-cap and small-cap stock exposures. This describes their decreased efficiency. Both of these schemes will continue to underperform until these sections bounce back. Although many market pundits have predicted a revival of small and mid-cap stocks, they are still sluggish mainly due to weak market sentiment. You can monitor this scheme carefully.
Before investing in these schemes, investors should consider a few points: First, do not invest in ELSS as they have the potential to give better yields in the long term. You should invest in ELSS only if there is a risk appetite to invest in the equity scheme. Equity is risky; as you understand; in the short term, it can also be volatile. Of course, over a more extended period, it has the potential to produce better yields. However, investing in ELSS does not have to be just your criteria.
If you do not have the necessary risk appetite, do not invest in them. Just keep in mind that ELSS funds mostly invest in stocks. Sacrifice those excess yields and be happy with traditional favorites such as Public Provident Fund (PPF), 5-year bank deposits, etc.
You may have heard of the sales pitch that ELSS funds have a lock-in period of at least three years among tax-saving investment options accessible under Section 80C. Yes, tax-saver mutual funds have a mandatory three-year lock-in period. However, this does not mean that you invest them keeping in mind the three-year horizon. Since they are primarily equities mutual fund schemes, you should invest with an investment horizon of at least five to seven years.
Lastly, include in your ELSS Investment general financial plan. They are perfect for meeting your financial long term objectives. You should not be required to hurry to redeem them after completing the mandatory lock-in period of three years. As long as they perform well, these plans can be conducted. You can sell them a year or two before (even sooner), before the financial target allocated to them.
If you still want to invest in ELSS funds but don’t understand which schemes to choose, here are our advised Equity Linked Saving Schemes or tax saving mutual funds to invest in 2019.
Best tax saver funds to invest in 2019
- Aditya Birla Sun Life Tax Relief 96
- L&T Tax Advantage
- Motilal Oswal Long Term Equity Fund
- Mirae Asset Tax Saver
- Invesco India Tax Plan
- Axis Long Term Equity Fund
- DSP Tax Saver
- Principal Tax Savings Fund
Note: Many mutual fund investors are trying to save money under Section 80C of the Income Tax Act for the best equity-linked saving scheme or ELSS.