<p dir="ltr"><span id="docs-internal-guid-95a3898c-7fff-38b4-291c-4cab2e6b8dd0">When it comes to saving taxes, <a href="https://www.utimf.com/">Mutual funds</a> also have a specific category of funds, which are eligible for tax benefit under Section 80C. This category of </span>tax saving mutual fund schemes is known as Equity Linked Savings Scheme (ELSS).
<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">When Rubber meets the Road – Execution</h2>
Having a diversified portfolio with investments across different securities and asset classes is always desirable, as it helps you to manage risks to a great extent. However, while diversifying your portfolio, one often ends up investing in multiple mutual fund schemes. Wouldn’t that be great if you can invest in multiple asset classes through one fund itself? Hybrid funds help you precisely do the same.
When one chooses to invest in equity markets, BSE Sensex and Nifty 50 are the two most familiar words for the investors. These are the name of two major stock indices in the country – BSE Sensex and Nifty 50. Since such indices are constructed using scientific methodologies and back-tested techniques, retail investors may prefer to have investment exposure in such indices. However, one cannot invest in such indices directly as they are not a security within themselves, but just an index of different securities.
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 – </span>Lumpsum investment or Systematic Investment Plan (SIP) investment. Let us discuss both these modes before deciding on choosing the most suitable investment method between SIP vs Lump sum. </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. </p>
<p dir="ltr">Source- Income Tax Return Statistics by Income Tax Department. </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.
