January is almost over. We are all getting ready for the Financial Year ending- that includes clearing of all pending bills, budgeting for the coming year; tax payment etc. Among these, Tax Payment is a hectic job. We need to check all the sources that bring in money and plan accordingly. Ours is the second most populous country which has over 133 Crores of people.
In the market, while purchasing, we often bargain. The bargaining continues until we save few pennies. Once the purchase is over, we return back home with a triumphant smile full of satisfaction, thinking “I saved money, and it should be made into a habit” or “I shouldn’t waste money unnecessarily”. It’s good to bargain if one feels the price is higher than it actually should be.
But the same person doesn’t think twice nor does he plan when it comes to Tax Payment. He straightaway pays the entire amount! How many of us are aware of the possible legal ways to save Tax? How many of us know the truth that Tax can be used for a Long-Term Wealth creation? The answer is very few! Still confused? The answer is ELSS (Equity Linked Savings Scheme).
ELSS is a Mutual Fund system that has been created for Tax Saving, as well as to offer good returns in due time. Here, the money is invested in Equity and Equity related instruments. From the total taxable income, up to Rs. 1.5 Lakh can be saved through ELSS.
Is ELSS good? If yes, why?
As said earlier, ELSS is not just a way to save Tax. It helps one to build Wealth. We all know that the stocks are fluctuating. So, the possibilities are more for the stocks’ value to increase. In due time, the returns are going to be really good!
This is just one advantage of ELSS. The other benefits are as follows-
• Lesser lock-in period- Easy availability of Money
ELSS funds have a lock-in period of just three years! One can hold on to the scheme or sell it after three years, as per his desire. This is far less compared to Public Provident fund (PPF) that has a lock-in period of 15 years. Other instruments also have a lock-in period of five years.
• Diversification-Reducing the risk of Loss
Like other Mutual Funds, ELSS invests in various assets. During Market fluctuation, there are chances for one asset to fall in value. But the others may rise or stay unaffected, thereby reducing the loss.
• Start Monthly SIP- Smaller amounts regularly instead of a Lump sum, automating them
It’s hard for the common man to invest a lump sum for Tax saving fund, towards the end of the Financial Year. So, one could break it up and invest as SIPs (Systematic Investment Plan), like other Mutual Funds. The other advantage of SIP is that it goes directly from the Bank, so one doesn’t have to save specifically for Tax payment.
• Less volatility than a normal Equity Fund
The three year lock-in period reduces the volatility of ELSS funds. During this period, one can’t sell his units, thereby reducing the Fund’s fluctuating value, lowering its risk.
Still confused? Contact your Financial Advisor or call +919349312345 to convert your Tax into Wealth. “You can be a part of our Nation’s Growth by investing in Tax Saving Funds”.
So, what are you waiting for? Together let’s move towards Financial Freedom!!!