Equity Linked Savings Scheme

With a plethora of savings schemes available in the market, Equity Linked Savings Scheme marks as one of the best schemes to help you secure a wealthy future. ELSS is basically a mutual fund scheme that comes with dual benefits of tax-free assured higher returns. Since the scheme has a lock-in period of 3 years, it promotes disciplined investment among the investors. The investment in ELSS can be made either using SIP (Systematic Investment Plan) or in lump sums.

Most financial experts agree that ELSS is a great tax-saving instrument as it comes with an excellent combination of certain features and benefits, making it one of the top investment choices.

  • Shortest lock-in period – Compared to others, ELSS has the shortest lock-in period of 3 years, while savings instruments such as FDs and PPFs has minimum lock-in period of 5 years and 15 years, respectively. Thus, equity linked savings scheme offers better flexibility to access funds. However, an investor can continue with the ELSS account even after 3 years.
  • Higher returns – While most investment instruments offer single digits returns on an average, ELSS promises significantly higher returns on maturity. This is because the scheme invests in a portfolio of equity instruments.
  • Tax benefits – ELSS counts for tax benefits other than Section 80 C and the investor can avail long-term capital gains for up to Rs.1 lakh. ELSS mutual funds are exempted from the IT and any gains above Rs.1 lakh are taxable at 10% annually.
  • Flexible investment option – An investor has got the choice to invest either using a SIP or in lump sum. This gives more flexibility to the investor to proceed with their investment strategy.
  • Lowest investment – Investors can begin investing in the ELSS with as low as initial investment of Rs.500 and can earn 2x returns for the same.
  • Easy withdrawals – Even though the investors cannot withdraw funds from the ELSS account during a lock-in period of 3 years, but after that, he or she has got the flexibility to withdraw funds from the account either partially or in full.
  • Highly secured – Investors can rest assure that their funds are in safe hands with the bank graded safety and security.
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Well, we have heard instructions from our elders to keep some cash readily available as emergencies can hit the door anytime with no warning or alert. In addition, till now we have definitely learned about the importance of following a good saving habit. Hence, while planning to open a savings account, make sure to do a thorough research to zero down on a scheme that suits best to your needs along with providing financial security in long-run.

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