If you want to save tax as well as get good returns, then Equity-Linked Savings Scheme (ELSS) can be a great option for you. ELSS not only helps you save tax but also provides the possibility of good returns in the long run.
If you are doing your tax planning in this financial year and also want to increase your wealth, then it is very important to focus on these funds which have given returns of more than 17% in the last few years.
In this report, we will talk about three such ELSS funds, which have given annual returns of more than 17%. By investing in these funds, you can not only save tax, but can also expect better returns in the long term.
First of all, know what is ELSS fund
Equity-Linked Savings Scheme (ELSS) is a special category of mutual funds, which are created for the purpose of tax-saving. These get tax exemption under Section 80C of the Income Tax Act, under which you can avail tax exemption by investing up to Rs 1.5 lakh in these funds. However, an important thing while investing in these funds is that they have a lock-in period of 3 years, that is, you cannot withdraw your money for at least 3 years.
Why are ELSS funds better?
ELSS funds prove to be a very good option for saving tax and getting good returns at the same time.
Good returns in the long term: ELSS funds invest primarily in stocks, and stocks are generally known to give good returns in the long term. That is, if you invest in these funds for a few years, you can expect good returns.
Low lock-in period: A big advantage of ELSS is that its lock-in period is only 3 years. This means that you do not get a chance to withdraw your money for at least 3 years. This is much less than other tax-saving options like PPF (Public Provident Fund) and NSC (National Savings Certificate), which have a long lock-in period.
Tax Savings: Investing in ELSS gives you a tax exemption of up to Rs 1.5 lakh under Section 80C of the Income Tax. This means that you can reduce your tax liability by investing up to this amount. This is a very good way to save tax.
Minimum Investment Amount: You can start investing in ELSS funds with a very small amount. You can start investing through SIP (Systematic Investment Plan) with just Rs 500. This makes it a very easy and flexible way for you, especially if you want to invest regularly.
Now let’s know about three such ELSS funds, which have given a return of more than 17 percent in the last 10 years and why they can be included in your investment portfolio.
1. Quant ELSS Tax Saver Fund – Direct Plan
Quant ELSS Tax Saver Fund can be a very good investment option, especially for those who are willing to take high risk and are looking to invest for the long term.
This fund has given an annual return of 20.88% in the last 10 years, which means that if you had invested in this fund 10 years ago, your investment would have given an average return of 20.88% every year. This is a very good return, as it is more than many other investment options.
Now let’s talk about SIP (Systematic Investment Plan). SIP is a method in which you invest a fixed amount every month. The SIP return of this fund has been 23.65%, which is even more amazing. This means that if you invest Rs 10,000 every month, your total investment would have grown very fast in 10 years. High SIP returns prove that the fund is able to provide good returns to its investors in good market times.
One of the advantages of investing in this fund is that it has the potential to deliver high returns in the long term, but keep in mind that this is a high-risk investment. Being an investment in stocks, the fund may go up or down during market fluctuations. Hence, this fund is suitable for investors who are willing to take risks and whose investment objective is to get good returns in the long term.
Key Statistics:
- Benchmark: BSE 500 TRI
- Risk Level: Very High
- Expense Ratio: 0.59%
- 10-year annualised return: 20.88%
- 10-year SIP return of the fund: 23.65%
- If you invest Rs 10,000 per month in this fund through SIP, you can have an amount of about Rs 41.94 lakh in 10 years. If you had invested in a lump sum, that amount would have also grown with very good returns. This fund is considered right for those investors who are ready for high returns and are planning a long-term investment.
2. Bank of India ELSS Tax Saver Fund – Direct Plan
Bank of India ELSS Tax Saver Fund – Direct Plan is another great investment option, especially for those investors who want to save their taxes as well as get good returns. This fund has given an annual return of 17.55% in the last 10 years. This means that if you had invested in this fund 10 years ago, on an average, you would have got a return of 17.55% on your investment every year.
This fund can also give good returns if invested through SIP (Systematic Investment Plan). SIP is a method in which you invest a fixed amount every month. This fund has given a return of 20.42% on SIP investment. This means that if you had invested Rs 10,000 per month every month, your amount could have grown to around Rs 35.22 lakh in 10 years. One of the major advantages of investing through SIP is that you can avoid market fluctuations, as you invest small amounts every month.
This fund is good for investors who are looking for a safe and medium-risk investment and who want to get good returns in the long term. The expense ratio of this fund is slightly high (0.84%), but still it has given an opportunity to save tax along with good returns.
Overall, by investing in Bank of India ELSS Tax Saver Fund, you can get a good return along with tax savings, provided you hold it for a long time and invest after understanding its risk.
Key Statistics:
- Benchmark: BSE 500 TRI
- Risk Level: Very High
- Expense Ratio: 0.84%
- 10-year annualized return: 17.55%
- 10-year SIP return of the fund: 20.42%
3.JM ELSS Tax Saver Fund – Direct Plan
JM ELSS Tax Saver Fund is also a great tax-saving fund, which has given an annualized return of 17.01% in the last 10 years. Investing in this fund through SIP can give you good growth, and this fund is suitable for investors who are looking for safe returns.
Key Statistics:
- Benchmark: BSE 500 TRI
- Risk Level: Very High
- Expense Ratio: 1.27%
- 10-year annualised return: 17.01%
- 10-year SIP return of the fund: 19.79%
If you had invested Rs 10,000 per month in this fund through SIP, your amount could have reached around Rs 34.04 lakh in 10 years. If you had invested in lump sum, your amount would have become Rs 4.81 lakh. Although the expense ratio of this fund is slightly high, it is still a fund that gives good returns in the long run.
Why invest in these funds?
1. Long-term returns: ELSS funds are known to give high returns especially in the long term. By investing in these funds, you can increase your tax as well as your wealth. In the last few years, these funds have given a return of more than 17%, which is a very good performance.
2. Tax savings: Investing in ELSS funds gives you tax exemption under section 80C. You can reduce your tax liability by investing up to Rs 1.5 lakh in this scheme. Apart from this, these funds have a lock-in period of 3 years, which gives you a chance to get good returns on your investment.
3. Investing through SIP: If you want to invest regularly, then you can invest in these funds through SIP. With SIP, you invest small amounts, which reduces the impact of market fluctuations and gives you long-term returns.
4. Investing in stocks: ELSS funds invest in stocks, which are known to give good returns in the long run. Moreover, the risk involved in these funds is also balanced with high returns.