Difference between revisions of "Equity Linked Savings Schemes"

Revision as of 01:57, 25 February 2017

ELSS or Equity Linked Savings Scheme is the preferred investment choice for tax saving under Section 80c for many tax payers.

However, ELSS is an "investment" and is market linked and hence like with any investment, there will be the risk of market price fluctions. This is why we need to invest at different price / time intervals so as to cost-average.

The best time to start investing in ELSS is the beginning of the year. However, it so happens that many investors forget this and often start in the middle of the year, some in December and few even in March.

The first thing you need to determine is how much time you have to invest and how much should you invest.

For instance, today is 10-Feb-2017 and we have like 50 days left to invest before March 31. This means that you need to invest 3k per day!

In such situations, when time frame is less, it is better to go for other tax saving avenues such as PPF or tax saver FD or NPS etc. But they have higher lockin periods compared to ELSS.

I generally go with one ELSS scheme per year rather than diversifying across fund houses. Good or bad, will stick to it. The rationale is that, since ELSS carries a 3-year lock in, we end up having folios of serveral mutual funds and each of them will have three year lock-ins.

Some good tax savers in current market conditions (February 2017) are:

Birla Sun Life Tax Relief 96 DSP BlackRock Tax Saver Fund Reliance Tax Saver Fund

It is important to stick to which ever ELSS you have chosen at the beginning of the financial year. For instance, you might have invested in Axis Longterm Equity for this FY. But apparently it is not performing that good. Despite this, it is important to stay with it for this FY.

When to start tax planning in ELSS?

The best time to start tax planning for the financial year is at the beginning of the financial year. i.e in April.

Whoever is first in the field and awaits the coming of the enemy, will be fresh for the fight; whoever is second in the field and has to hasten to battle will arrive exhausted

- Sun Tzu in Art of War

One Elss for the entire 3 years?

There are several strategies one can use when planning their ELSS. One such strategy is to pick one scheme per FY. Review the scheme again in the next financial year and if good, continue with it else go for a new ELSS scheme.

For instance, I might have started with Axis ELSS for this FY, i will SIP / invest in it till March 31, 2017. I shall review all ELSS schemes once again and then pick the same or another scheme for next FY ie FY 1718 in the first week of April 2017.

ELSS and timing the market

Market is going high now days... So we have to invest in elss or wait for some days for down market ???

• Dont time the market for ELSS since it is a 3+ year investment. However, spread your ELSS investment in what ever time available from now till March 31.
• Date: Feb 25, 2017

Views on Mirae asset tax saver fund

• It is undoubedly a good but a recent performer. Low AUM. Markets rallied well and so did it. Not sure how it will perform in a down trending market.
• Dated: Feb 21, 2017

Rs 1 Lakh in ELSS before March 31, 2017

• Investing gives good returns when it is given time. So, always use ELSS investing right at the beginning of the financial year and not at the end.
• That said, now that we have very less time before March 31, 2017 and you still wanted to go for ELSS, here is what I feel.
• Invest in Rs 5k in Birla Sunlife Tax Relief 96 today and Rs 5k in Reliance Tax Saver tomorrow. Repeat this process by investing alternatively between the schemes till this Rs 1 Lakh investment target is met. If you cannot do this is too difficult for you, do it with 10k once a week
• Dated: Feb 21, 2017

Best tax saver from BSL MF

One of my friend advised me to invest a lumpsum amount of rs. 1 lakh in mutual fund of birla which is for 3 year and it is a tax saver. Will u plz tell me about this.

• Need exact name of scheme to decide. BSL has two ELSS schemes. Also, are you investing for the sake of tax saving ?
• Since time is less from now to March 31, 2017, invest like 15k per week under its DIRECT plan - GROWTH option over lumpsum investment
• Lumpsum investments are risky. The longer and frequent you can spread your investment, the better it will be.
• You can invest lumpsum in an arbitrage / liquid debt fund and give a STP instruction to switch to a target ELSS scheme but since for this FY, time available is less, you need to do something like manual investing for now. You can plan this lumpsum-STP thing for next FY. i.e in April 2017.
• Dated: Feb 24, 2017