Equity linked savings scheme (ELSS) as with the asset class that it includes provides return in the long run and if you are just aiming at it only from the tax-saving point it shall not be a wise call, as any investment decision should be coordinated with your larger future financial goal. The instrument i.e. ELSS provides a deduction to a maximum of Rs. 1.5 lakh in a FY as per the section 80C.
Plus there is now LTCG tax on it, so even that should not be a deterrent preventing you to select the ELSS for your tax planning and saving goals.
And as per experts, the option can be just suitable in the current times, when the markets have corrected quite a bit and there remains scope to earn as against last year, where the instrument yielded negative returns.
Current case for ELSS
As against the last year, where the euphoria was immensely high and every other day we were witness to market scaling new high, there is correction and now with regard to mutual fund units because of the low NAV, you as an investor are able to get more units.
Strategy to go by when investing in ELSS
And so the right strategy to own a ELSS fund is may be invest in two schemes i.e. go with the growth and the other can be a value fund. So, if one does not fares, you still can make up for the loss from the other. So, divergent schemes will be good choice for investment for over a longer tenure.
Herein, your call with regard to the fund as well as the fund manager will go a long way in providing you sizable returns. So, past record of the scheme needs to be studied through.
Also, when the fund manager has the prowess to invest across categories and market caps there is benefit to the scheme. And this is well able to follow when the size of the scheme is retained at almost the same level.
Then there is a benefit as a three-year lock in as short term calls are not that can be seen for the instrument.
So, without the fear of volatility that is likely to be further high this election year, investors can go for their tax planning and saving exercise by investing in ELSS funds.