ELSS Fund - Best Tax Saving Mutual Fund - IIFL

1
ELSS Fund - Best Tax Saving Mutual Fund
Visit www.iifl.com
2
Introduction
An equity-linked saving scheme (ELSS) has emerged
as an important means of tax saving and wealth
creation for investors. With a predominantly
equity portfolio, the ELSS is able to combine the
best of tax saving and equity exposure to enhance
returns to investors in post-tax terms. If you
have decided to invest in an ELSS fund or have
been advised to invest in an ELSS fund, you need
to first acquaint yourself with the nuances of
what an ELSS is all about. An equity-linked
savings scheme (ELSS) is your passport to saving
on taxes and creating wealth in the long run at
the same time.
3
Things Should Know Before Investing In ELSS Funds
1. An ELSS Fund is an Equity
Fund
4
2. ELSS Entails a Mandatory 3-year Lock-in Period
An ELSS fund needs to be locked in for 3 years
from the date of investing. Even if you want to
exit the fund in between, you cannot do so. The
concept of 3-year lock-in period will kick in
from the date of investment.
5
3. The Principal Attraction of ELSS is the Tax
Benefit

6
4. ELSS Creates Wealth in the Long Run At the
end of 3 years, it is not mandatory for you to
exit your ELSS. You can continue to hold it even
for the next 20 years. The choice is yours. There
are two things you need to understand why ELSS
helps to create wealth
7
5. ELSS Gives Smart Yields Due to the Tax
Exemption This is an interesting aspect of ELSS
funds. When you invest in ELSS at a NAV of
Rs.100, you get Rs.30 as tax exemption in the
year of investment. After 3 years if the NAV has
gone up to Rs.148, it means you have made CAGR
returns of 14 annualized.
8
Which Plan to Choose in an ELSS?
Like in any mutual fund, you have the choice of
growth and dividend plans. Which should you
choose? If you are in it for long-term growth,
then stick to growth plans of ELSS. But if you
are looking to take some money out of the
locked-in corpus each year, then dividend option
is right for you. The choice is entirely yours!
9
Top Reasons Why One Should Invest In ELSS
ELSS Helps in Wealth Creation Let us not forget
that ELSS funds are essentially equity funds with
a portfolio of quality equity stocks. Equities
typically work best over the longer term and that
is where ELSS funds bring an added advantage.
10

• ELSS is a good starting point
• A very good way to start your exposure to
  equities can be through the ELSS route. All of us
  need to plan our taxes each year. Instead of
  going for products like PPF and endowments That
  automatically makes your investment proposition
  attractive. Secondly, since you are going to have
  a 3-year holding period by default there is no
  compulsion on you to worry about short-term
  volatility in the prices.

11

• ELSS is tax efficient
• The ELSS mainly became popular because of its tax
  breaks. It is quite easy to understand. Your
  annual contribution to ELSS is exempt from tax
  under Section 80C of the Income Tax Act so you
  get an exemption to the tune of 30 of your
  contribution (based on your tax slab).

12

• ELSS syncs effortlessly with your financial plan
• Most investors do not appreciate this aspect but
  it is very important when you widen your
  investment portfolio. You are supposed to start
  your financial journey with a financial plan
  which gives a colour of money to your dreams and
  then allocates SIPs to reach that target. Since
  ELSS is required to fit into your larger
  financial plan you can actually do a SIP on ELSS

13

• Manage cash flows better through ELSS
• This is an interesting aspect of ELSS and
  therefore needs a slightly more detailed
  understanding. Unlike other Section 80C
  investments like PPF and bank FDs, ELSS has a
  much shorter lock-in period of just 3 years. This
  is in contrast to 5-year lock in for Bank FDs and
  ULIPs and a 7-year lock in for PPF. This ensures
  that your cash flows can be churned much faster
  in an ELSS compared to other Section 80C
  instruments.

14
About Us

• IIFL is a financial services conglomerate which
  was started by a group of passionate
  entrepreneurs in 1995. The genesis of IIFL lies
  in the power of dreaming big and believing in
  your dreams.
• IIFL was the pioneer in the retail broking
  industry with its launch of 5paisa trading
  platform which offered the lowest brokerage in
  the industry and the freedom from traditional
  ways of transacting. Our strength has been to
  continuously innovate and reinvent ourselves

Visit www.iifl.com