5 Ways You Can Ace ELSS Investment


February 28, 2019

ELSS Investment has in a very short period of time marked itself as a Mutual Fund type that can be trusted for high returns and great amount of tax savings.

The benefits that the fund type comes packaged with in terms of high rate of returns and being one of the most profitable mode of tax saving investment medium, the demand for ELSS is on an all-time high.

Now, even when there is a scenario of high demand, there is nonetheless an underlying challenge that comes with the fact that ELSS is an equity based mode of mutual fund, which are famous to come attached with the tag of high-return high-risk.

In a situation like this when you have an investment mode that comes with so many benefits and risks, it becomes almost necessary to understand the right moves that you should take to ace the investment.

Without further delay, here you go –

5 Ways You can Ace ELSS Investments Like a Pro

By Choosing the Best Fund Type

Before you take your money out from account and think about putting it into an ELSS mutual fund, it is important to give yourself time to select a fund or set of funds that are aligned with the goal that you wish to achieve and in line with the risk appetite that you carry.

The importance of carefully selecting your ELSS fund scheme becomes even more important because of the common fact that they are equity based, which is famous for coming with high-returns and high-risk.

As a general note of advice, funds which consist of large-cap funds are known to be a lot more steady and risk-free as compared to the mid and small-cap funds.

Have a clear motive to achieve

Investments, whether in ELSS or any other fund type only deem to be profitable when made to fulfill a goal. For example, if you have a goal to own a car or buy your dream house or even gather funds for your child’s education, it would only be wise to start looking at funds that are designed to help fulfill that goal.

So, the ideal steps are – decide your goal – categorize it in short, mid, and long-term, select an ELSS fund in the time zone – reap benefits.

Treat NAV as simply a number

The truth about NAV is that the mechanism only determines number of the Mutual Fund units which you will get in return of an invested amount. And just that. For example, if you put in Rs. 1,000 in mutual fund that comes with Rs. 10 NAV, the units that you get is 100.

Similarly, you get a total of 10 units when the NAV amount is Rs. 100. So, what happens is that only the unit number is shifting and not the amount of return.

Ultimately, in the above mentioned example, if you earn 10% return the investment will grow and become Rs. 1100, no mater how low or high the Net Asset Value is at time of the investment.

Remain invested

The only way to survive the world of investment is to tread it patiently.

When you invest in mutual funds, specially an equity based medium like ELSS, it becomes a working formula that if you wish to make profits, you will have to remain invested for the long term.

Only when you give time to your ELSS fund to rise and take advantage of the rupee cost averaging functionality, the returns coming in from invested ELSS fund grows. And given the fact that ELSS funds come with a lock-in period of 3 years, the probability of high return only increases.

What we advice is that even when your lock-in period ends, you should redeem the investment in portions. A way to achieve that is through SWP, the process ensures that some portion of the investment is withdrawn but some remain invested to grow further.

Keep an Eye Out on the fund

It is of prime importance to regularly monitor the investments that you have made in ELSS to see if the investment is even working in your favour or not. The information will help you decide on whether or not to continue with the investment.

Now that you know the different ways you can invest in ELSS for maximum growth, it is time to find the right fund scheme, something that our team of fund experts can help you find out.

But remember, it ultimately is a game of patience. The more patience you put in the more benefits you will be able to reap.