Let’s take into consideration the money you make on an everyday basis, it is not very easy to evaluate your financial position from time to time considering, life keeps us busy and we barely get a chance to do that anyways.
We hardly peek our heads out of the heard and look over the horizon in order to see where we are heading. This quality of following everyone is known as dogmatism; dogmatism is a very prominent phenomenon amongst the generation of working class people today and will continue to be a tendency for a very long time.
Just keep on following the line, see where it takes you, where you end up going. It’s just that you will have no control over it. You will do what everyone else does. It is weird, but very much true.
Come what may; do not let your investments suffer. Your investments make the difference in between you having a secured future or you making a mockery of the next couple of hundred generations to come.
Plan your investments right, make sure the investments are a fine balance of the ones that provide you with very good returns and also the ones that help you save on income tax. There are many investment options today that help you not only to save on tax, but also make the right decisions in terms of tax savings and other returns.
You can receive reimbursements and tax related deductions on investments such as EMI on home loans, LIC, life insurance, health insurance and then there is ELSS.
So let’s discuss in detail what is ELSS and how to invest in ELSS?
What is ELSS?
Full form of ELSS is equity linked saving scheme. These investments are mostly driven by tax related saving schemes. But make sure you should receive the best kind of returns and it should not take away your peace of mind. ELSS should not charge expenses that are higher than others and the ELSS provider should be the best. Make sure you plan out your investment in ELSS very carefully and it does not make a mockery of your other investments.
Let’s discuss the steps related to choosing the best Equity related Saving schemes,
Illustrated below in a tabular format
Steps to invest in ELSS
Selection of the tax saving scheme that you believe will suit you
The scheme is based on the returns it offers, for example last year Axis Mutual fund gave an annual return of more than 40%, where as escorts gave a return of barely 15% annually. Considering these figures it is very difficult to predict the best mutual funds, but chances are that most likely the highest forming mutual fund last year will become the highest performing mutual fund this year as well.
Choose between an option of regular mutual funds, or tax saving mutual fund schemes
The ELSS mutual fund has 2 plans mainly, first being regular and the other being tax saving. Regular charges more or a higher expense ratio every year because of the payment to the one who distributes mutual fund.The flip side of which direct plan does not have to pay the distributors at all. The major difference of the plans being, they will have different NAV’s. If compared to each other the one to go for is the direct plan.
Go ahead and open a bank account
Well sadly it is an important step as the dividends will have to be credited somewhere, somewhere being the bank account which will be under your name.
Pick your intermediary
There are a ton of mutual fund distributors or middle men all over the country and even though you are allowed to directly deal with the company, it is very much advised to pick an intermediary who will step in take the burden off your shoulders of managing your mutual funds. The added advantage is that, they do not charge a commission for their services but instead the companies that they deal with, give them their cut when they get in a new client.
Mutual fund distributor
there are a couple of people who take up the profession of being a mutual fund distributor, What a mutual fund distributor does is, he or she invests in your behalf in a fund that they think is suitable and will provide you related benefits. A word of caution though. pick an ELSS that benefits you not the distributor
You can also pick an online distributor instead of the one that you have met in person. It will all in the end come down to the one that gives you the best returns. You may also look up as to how you can invest in ELSS online
Advantages of ELSS
ELSS offer tax free gains, very high liquidity and very low charges everything about ELSS is transparency. It may come with a lock in period of barely 3 years, post which one can withdraw or displace the amount according to their wish. You can calculate the exact amount of investment with ELSS investment calculator.
Where to open an ELSS account
There are many nationalized and private banks that give you the option of opening an ELSS account. Make sure inform your banker, that’s what you wish to do. You can also look up how to open ELSS account in SBI, on the internet in order to find out ways of opening an account. You may if you wish to invest annually or Bi-annually.
Even quarterly is an option but distributors always suggest that you should start a SIP. This will make all the difference and you will eventually be able to understand that SIP has more benefits as compared to any other kind of investments.
When it comes to banks there are many banks who give you the option of ELSS, some of the top contenders being SBI and Union bank of India in terms of nationalized bank where as axis and HDFC are the private banks that ring in the most number of investors every year. Also keep in mind to look it up online how to invest in ELSS HDFC or how to invest in ELSS axis. To search about SIP you can have a look at how to invest in ELSS through sip and ELSS investment procedure.
Investment related options are many and ELSS is one of the better options in the market. The short lock in period and as it being an equity related scheme the potential for high returns makes it a very attractive option amongst investors.
You can opt for the dividend option and receive returns during the lock in period. Also one can opt for SIP in this plan which is a boon for salaried and first time investors. You can have a discussion with one of our representatives and they will explain the details of investing in ELSS. You can also look out for ELSS investment plan on the internet and find out more about it.
The only major disadvantage of ELSS is the fact that the risk involved is very high which makes for a something of a gamble. In the event that the company shuts down there are no chances that you will receive even your principal amount. That aside even while you stay invested it entirely depends on the market conditions to give you your returns.
To avoid any risky investments, chances are that an advisor can give you a detailed and safe suggestion of going about investing in the right kind of fund. Also past records of the fund are key determining factors of its future performance. So pick a fund that has performed well in the past in order to give you better performance in the future as well.
That aside make sure once your investment is done, you should consult with your distributor or middle man to understand the performance of the existing investments and future predictions as well.
Knowledge is the key to success here and you must gain knowledge in relation to these funds, time and again. You must keep yourself updated in order to avoid any kind of surprises. It is said that the common notion with regards to investments are shorter the duration, higher are the chances of loss and profits, but the longer you stay invested more are the chances of you making a more steady and stable return.
So let your investment complete an entire financial cycle which will help you understand the highs and lows of the market. So stay invested for as long as you can. Also try not to put all your eggs in the same basket. As in branch out your investments to as many options as you can which will help you stay afloat in case your other investments happen to sink. You will make money even when the market conditions are bad.
Over and all, do connect with us to understand investments and the most profitable returns that you can get. We at Policy Bazaar have a team of experts who strive to provide the most effective solutions in the market.
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