(Last Updated On: July 16, 2018)

One of frequent question we get from readers is: What is ELSS or Equity Linked Savings Scheme? So, we have covered up ELSS meaning and key features of ELSS mutual fund investments.

ELSS means Equity linked saving schemes. These are saving or investment schemes which invest majorily is equity assets. ELSS schemes are essentially a diverisfied mutual funds. Popularity of ELSS schemes stems from the fact that investments made in ELSS are tax deductible under section 80C.”

Here is a Video to help you understand ELSS better:

a

And here is a presentation to explain key features of ELSS

https://www.slideshare.net/AnupChakraborty2/why-elss-is-an-ideal-investment?qid=50652d60-1be2-42b0-88a7-bc9b504156b6&v=&b=&from_search=3

Equity linked saving schemes in India are offered by almost every mutual fund company. They are also popularly called Tax saving mutual funds.

elss meaning, elss funds, elss, what is elss, tax saving mutual fund

Key features of ELSS schemes or ELSS mutual funds:

  1. They are diversified equity mutual funds and hence the majority of ELSS schemes invest in diversified equities which include large cap, small cap, and mid cap. In general, diversified equity funds invest 70-80% of assets in equities.
  2. ELSS funds have a lock-in period of 3 years. That means you cannot exit an ELSS funds for 3 years. Lock-in period for ELSS funds is better  than any other tax saving investment option
  3. ELSS funds historically have given highest returns amongst the tax saving investment options available in the market.
  4.  You can invest in ELSS online or offline.
  5. ELSS provides you great flexibility to invest you can invest at one time(lump sum) or can also invest through SIP( systematic investment plan)
  6. You can start with as little as Rs 500 per month of investment and can invest as much as you want in ELSS.Tax benefit will only be available on maximum of 1.5 lac though
  7. ELSS schemes have come in 2 basic flavors. Growth schemes and dividend schemes. In dividend schemes, investors get regular dividends. Please note that dividend generated from ELSS schemes is taxable as per your tax bracket
  8.  ELSS funds do not have any entry or exit load.
  9. Expense ratio of top ELSS funds varies from 2-3 %
  10. ELSS funds are a great way to invest for the long term as equity investments. As in long-term, equities  outperform other investment options
ALSO READ  Reliance Nivesh Lakshya Fund: An Emerging Long Term Investment Option

Frequently Asked Questions on ELSS

1. Can I withdraw funds from ELSS schemes before 3 years ?

No, you cannot withdraw funds from ELSS schemes before 3 years from the date of investment. All investments are subject to 3 year lock-in period

2. Should I invest lump sum or SIP in ELSS funds?

In general, SIP helps you to average your cost of acquisition and you do not need to worry about timing the market.So I recommend investing using SIP in the funds.

3. Is there any entry or exit loads on ELSS investments?

No there are no entry or exit loads in ELSS investments

4. Should I Invest in ELSS or PPF? 

You can check our detailed post on ELSS vs PPF

5. As an NRI can I invest in ELSS schemes?

Yes, you can invest in ELSS schemes.

6. How to chose an ELSS Fund?

You can read a detailed post on how to select a mutual fund here

Disclaimer: This post is not a financial advice. Please consult your financial adviser before taking an investment decision. Fintrakk.com or any of its representatives are not responsible for any loss that might happen due to your investments. Kindly follow due diligence and be cautious while investing your money in risky asset classes.

What is ELSS? Meaning, Features of this Tax Saving Mutual Fundhttps://fintrakk.com/wp-content/uploads/2018/07/ELSS-mutual-funds-new-e1531699268949.pnghttps://fintrakk.com/wp-content/uploads/2018/07/ELSS-mutual-funds-new-150x150.pngadminInvestmentELSS,ELSS funds,ELSS meaning,long term investment,Mutual Funds,Tax Saving Mutual funds,What is ELSSOne of frequent question we get from readers is: What is ELSS or Equity Linked Savings Scheme? So, we have covered up ELSS meaning and key features of ELSS mutual fund investments. 'ELSS means Equity linked saving schemes. These are saving or investment schemes which invest majorily is equity assets. ELSS schemes...Personal Finance Blog