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What if there was a way to build your wealth for the long term while also enjoying tax benefits? You might think of traditional savings options with lengthy lock-in periods. But did you know other tax-saving avenues with shorter investment durations offer decent returns too?

Understanding Equity-linked Savings Schemes (ELSS)

An equity-linked savings scheme (ELSS) is a type of mutual fund that not only helps you grow your money but also provides tax benefits. These funds primarily invest in stocks, offering the potential for higher returns compared to other tax-saving instruments like fixed deposits or the Public Provident Fund (PPF). If you wish to know more, consult experts for mutual fund investment plans in Mumbai.

Things to Consider While Investing in ELSS (Tax-saving Mutual Funds)

  1. Lock-in Period: ELSS funds come with a lock-in period of three years, which is shorter compared to other tax-saving options like PPF or National Savings Certificate (NSC). This means your money remains invested for a relatively shorter duration.

  2. Potential Returns: Since ELSS invests predominantly in equities, they have the potential to deliver higher returns over the long term. However, it's essential to remember that returns from equity investments are subject to market fluctuations.

  3. Risk Factor: While ELSS can offer attractive returns, they also come with a certain level of risk due to their exposure to the stock market. Before making an ELSS investment, it is important to determine your investment horizon and risk tolerance.

  4. Tax Benefits: One of the primary attractions of ELSS is the tax benefits it offers under Section 80C of the Income Tax Act. Investors can claim a deduction of up to ?1.5 lakh in a financial year by investing in ELSS, effectively reducing their taxable income.

  5. Systematic Investment Plan (SIP) Option: Investing in ELSS through a Systematic Investment Plan (SIP) allows you to invest a fixed amount regularly, helping you benefit from rupee-cost averaging and discipline in investments.

  6. Fund Selection: With numerous ELSS funds available in the market, it's essential to research and select funds that align with your investment objectives, risk profile, and financial goals. Consider factors such as fund performance, fund manager expertise, and expense ratio while making your selection.


Equity-linked savings plans (ELSS) present a special chance for investors to reduce their tax burdens while also increasing their potential for financial growth. Investors can take advantage of Section 80C tax savings and the growth potential of the equity market by making an ELSS investment. Before making an ELSS investment, you should know your risk tolerance and be sure that it will help you achieve your financial objectives. You can seek guidance from a reliable tax saving mutual fund planner in mumbai for risk profiling and suitable investments for your goals.