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Have you ever lost yourself in conversation about mutual funds and tax-sewing schemes? With so many options, where does anyone start?
If you have just started your financial plan journey, there is a possibility that you have come to ELSS (Equity Linked Saving Scheme). This is a popular option for young professionals such as we want to invest in the market, while enjoying income tax allowances. But is this the only smart option? Let’s know.
First, what is it?
An ELSS fund is a diverse equity mutual fund that comes with a tax profit. It invests a major part of its corpus in equity or equity-related devices. This is usually an investment for those who want market risk and claim deduction under Section 80C of the Income Tax Act.
What to consider before investing in ELSS:
1. Market risk: ELSS investment markets are subject to ups and downs. While he has historically provided good returns, they come with risks.
2. Lock-in period: Unlike Open-Anduel Mutual Fund, a three-year lock-in period is mandatory in ELSS. This means no quick withdrawal.
3. Post-lock-in option: Once it is three years, you will need to decide what to invest, redeem your funds, or re -organize elsewhere.
If you are comfortable with ups and downs in the market, ELSS is a solid option. According to the association of Mutual Funds in India, ELSS Funds have seen ₹ 2,030 crore in outflow since April 2024, with the biggest decline of ₹ 637 crore in July. It may suggest that some investors are losing confidence or looking at other investment options. In addition, the return from ELSS funds since April 2024 has increased from 0.88% to 7.16%. This shows that the return can be quite different from one fund to another. Some funds are performing well, while others are not.
While ELSS remains a strong option for tax-saving investment, you may want to see an option that provides an additional layer of financial security while increasing your money.
The Best of Both Worlds
ULIP (Unit Linked Insurance Plan) is a unique mixed bag- a combination of fund creation with financial security. Instead of fully focusing on the returns associated with the market, Ulip offers additional benefits of life insurance.
Ulips allow investors to allocate their money in various asset classes including equity and date funds. This flexibility can help you balance the risk by ensuring long -term wealth accumulation. In addition, they come with additional benefits of life insurance coverage, provide financial security to their loved ones while your investment continues to increase.
HDFC Life Click 2 InvestmentFor example, there is a great ulip to invest. Here are some of its features:
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Get fund price in maturity or periodic installments depending on your requirements.
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You can do partial withdrawal from money to meet financial emergency situations, if any.
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Pay once under flexibility or single salary to save regularly for a limited period of 5, 6, 7, 8, 9, and 10 years.
Instead of selecting between ELSS and Ulips, you should benefit from inclusion of both in your portfolio. ELSS helps to achieve market risk with a relatively low lock-in period, making it a solid tax-saving tool. Meanwhile, Ulips provide a more structured way to create money over time, making them an excellent option for long -term financial security.
At the end of the day, financial planning is about making money smartly. So why not find out your options and invest with a strategy that conforms to the goals of your life?
