Are you interested in multiplying your income while saving tax? If yes, the Equity Linked Savings Scheme, ELSS, is your perfect plan. Of course, one can opt for various mutual funds savings plans to get a good return. But, the ELSS program is your best bet. So why invest in ELSS? Simple answer? Tax saving. Before investing, let us look into the top ELSS funds you must know about.
Why invest in ELSS funds?
Like any other mutual fund plan, the ELSS funds are also subject to market risk. Thus, it is also possible to incur losses while investing. So then, why go for investing in ELSS funds?
Compared to other schemes, the ELSS can offer you higher returns on your investment. This is because these schemes invest in stocks, which yield a higher output in the long term. Also, unlike most investment plans, the ELSS has the least period for locking in. For example, the lock-in period for a public provident fund is fifteen years.
The minimum lock-in period of ELSS is three years. Returns are much better in the longer run. When it comes to investors, most generally add a principal amount for three years. Then, after five or seven years, they add more money when they start seeing returns. This can also be a good option for you.
10 Best Tax-Saving ELSS Mutual Funds
Here are the top ELSS funds that you must know about.
- Mirae asset tax saver fund direct growth:
The Mirae asset tax saver fund direct growth is excellent. The main motto of this scheme is to generate long-term revenue for its investors. It operates with the help of a diversified portfolio of equity and related plans. It has a much lower expense ratio of 0.58% in 2023.
- DSP Tax Saver Fund:
The DSP tax-saving ELSS funds will help you save money on taxes. The fund manager is free to invest in any possibility the market may present. This is because the fund does not need any particular investing strategy. As a result, the fund has a better churn ratio than most of its competitors. You must invest in these ELSS mutual funds.
- Union Tax Saver ELSS Fund:
This fund is ideal for investors who are investing for at least three years and are seeking additional income tax benefits apart from higher returns. It has 95.77% investment in Indian equities, out of which 52.85% is in large-cap stocks, 11.65% is mid-cap companies, and 10.3% in small-cap stocks. Furthermore, it has 0.08% investment in debt, of which 0.08% is in government securities.
- Bank of India Tax Advantage Direct Growth:
The Bank of India launched this ELSS mutual funds scheme. This scheme creates a diversified portfolio. It consists of various company shares with well-functioning business models. In domestic equities, the fund has an investment of 97.07%, out of which 48.85% is in large-cap companies, 21.15% is in mid-cap stocks, and 14.05% in small-cap stocks. Additionally, it has 0.07% investment in debt, of which 0.07% is in government securities.
- Canara Robeco equity tax saver direct growth plan:
This plan wishes to achieve success through long-term valuation. It invests in equities. It sponsors primary, secondary, and overseas markets. This fund has 94.86% investment in domestic equities of which 60.95% is in large-cap stocks, 12.19% in mid cap stocks, and 6.15% in small-cap stocks.
- Kotak Tax Saver Fund:
The fund invests according to the growth at a fair price philosophy. It has 96.58% investment in domestic equities. A major chunk of this investment is in large-cap stocks, which is about 60.94%. In mid-cap, the investment is 19.01%, and 11.07% in small-cap stocks. However, be ready to incur mild losses while investing in the funds.
- Bandhan Tax Advantage ELSS Fund:
This fund is ideal for people who want to create wealth over long term. It invests predominantly in equity and equity related securities with a three year lock-in period and income tax benefit under Section 80C. The fund has 93.42% investment in domestic equities of which 55.06% is in large-cap stocks, 10.43% is in mid-cap companies, and 20.74% is in small-cap stocks.
- PGIM India ELSS Tax Saver Fund:
The fund’s main objective is to generate long-term capital appreciation by predominantly investing in equity and equity related instruments. It actively manages a diversified portfolio of strong growth companies with sustainable business models. It has 93.18% investment in domestic equities. Out of this investment, 65.15% is in large-cap stocks, 11.38% is in mid-cap stocks, and 4.58% is in small-cap companies. Furthermore, it has 0.21% investment in debt and 0.21% is in government securities.
- Quant Tax Plan:
This is the first recommendation if you want to invest in a top ELSS fund. The scheme helps to gain funds by investing in equity shares. Not only this, but the quant tax plan’s direct growth also gives out dividends to its investors. It has 97.43% investment in domestic equities. 57.61% of the investment is in large-cap stocks, 10.07% is in mid-cap stocks, and 8.8% in small-cap stocks.
- Nippon India Tax Saver ELSS Fund:
This scheme uses an internal quant-based structure. It aims to support its growth at a fair price strategy. The portfolio seeks to exhibit a large cap bias. This happens while maintaining quality. Along with tactical exposures to mid-caps depend on a more significant price-value differential. As a result, it has a long-term tendency. The fund has 99.39% investment in domestic equities. Of this, 59.83% is in large-cap stocks, 10.84% is in mid-cap stocks, and 10.88% in small-cap stocks.
An equity-linked savings scheme helps you multiply your hard-earned money. At the same time, it allows you to pocket a more significant amount by allowing you to save money on taxes. These schemes have an outstanding possibility to provide you with greater returns. So why are you still waiting? If you need help with finances, you can always reach out to experts such as Piramal Finance to help you find the best solutions to understand savings schemes, personal loans, or tax saving schemes better. Get expert help to save more money today!
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