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We are already into the last month of the financial year 2019-20, and it is that time of the year when everyone starts thinking about filing taxes. Income tax laws provide for certain tax benefits under different provisions, including Section 80C (tax-saving investments and payments), Section 80D (payment towards medical insurance premium), Section 80G (donations to eligible charitable funds and trusts) etc. of the Indian Income Tax Act. 

<p dir="ltr"><span id="docs-internal-guid-a4810314-7fff-e028-ffe1-5b7ac225148d">When it comes to investing in mutual funds, the investors may invest in two modes &ndash;&nbsp;</span>Lumpsum investment&nbsp;or Systematic Investment Plan (SIP) investment. Let us discuss both these modes before deciding on choosing the most suitable investment method between&nbsp;SIP vs Lump sum.&nbsp;</p>

<p dir="ltr">With a salary income of Rs. 20 lakh crores declared in the ITRs filed for the financial year 2017-18, 58% of the overall income of the Individual taxpayers is contributed by income from salaries.&nbsp;</p>

<p dir="ltr">Source- Income Tax Return Statistics by Income Tax Department.&nbsp;</p>

Systematic Investment Plan (SIP) allows an investor to invest regularly in mutual funds on periodic intervals. As such, it enables investors to steer through the market movements effortlessly. Indian retail investors also prefer to invest in the markets through SIPs, as is evident from the monthly SIP inflows, which have sustained above Rs. 8,000 crores for more than a year now (Source: Association of Mutual Funds in India – AMFI, as on 31st December 2019).

Market indices such as S&P BSE Sensex, NSE Nifty50, etc. are created by adopting scientific methodologies and back-tested techniques. As such, the investors may wish to invest in such indices to have smooth investment experience. However, since such indices are not tradable security in themselves, it is a difficult proposition for the investors to construct a similar investment portfolio, which replicates such an index. Index funds may be suitable to meet such investing needs.

Equity Linked Saving Schemes (ELSS) is one of the available investment options under Section 80C and is steadily emerging as a preferred investment choice amongst the investors for tax saving. This is also reflected in the ELSS Category AUM (Assets Under Management) of Rs. 1.04 lakh crores as on 31st December 2019 amounting to around 4% of the overall industry AUM.

<p>To accomplish your personal financial goals, it is paramount that you invest regularly and steadily move towards the goal. Just as it is vital to invest periodically, choosing the right investment tool is equally important. You can also choose to invest directly in stocks, or invest in markets through mutual funds. Knowing the difference between stocks and mutual funds is essential to start your investing journey. If you are in a dilemma of&nbsp;investing in mutual funds vs stocks, this article will help you in your decision-making process.</p>

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<p style="display:none">Having secured the fundamentals it is time to ensure that the hard work you put in to earn your money does not go wasted and you make your money work as hard as well.</p>

<h2 style="font-size:21px"><strong>Building a comfortable path</strong></h2>

Systematic Investment Plan (SIP) allows the investors to invest in a mutual fund scheme of their choice at periodical intervals. It automates the investment process once the investor has completed the registration process, as the investments continue to be regularly made irrespective of market ups and downs.