As we move towards the end of the 2019 calendar year, most employees in the salaried class have started planning for the 2018-19 fiscal year savings. While the tax-saving plan is not the eleventh hour of work, most employees hurry to do this tax-saving scheme and usually invest in unplanned tax-saving instruments. Given this ideology, I decided to write an article on Best ELSS Funds 2019today – Top tax saving Mutual Funds for 2019.
Tax planning, of course, should be done throughout the year and not a single ball game should be considered so that everyone can have the best plan in the kitty according to their needs.
Is ELSS investment good for the long term?
There are plenty of investment options for tax benefits under section 80C, but investing in equity-linked savings schemes (ELSS) or tax-saving equity mutual funds is considered one of the best options for tax savings. Financial experts cum planners always indicate that investing in ELSS mutual funds is the best long-term tax-saving investment for wealth development. This is sensible, as ELSS is one of the most liquid instruments concerning other tax-saving instruments. Besides, investment in ELSS is legally closed for three years, which enables investors to create mandatory long-term assets. For each investment in SIP methods or lump sum investment, one can withdraw his investment after three years. But ideally, it has been suggested to invest for 7 to 10 years on investment regardless of market fluctuations.
Benefits of investing in tax saving mutual funds
A diversified mutual equity fund is an equity-linked saving scheme (ELSS). It invests your cash in the company’s equity shares through market capitalization, i.e., large-cap / mid-cap / small-cap. Such diversification allows you to navigate through turbulent markets and maintain your yield to your expectations.
Lowest Lock-in period- ELSS has the shortest lock-in period of 3 years compared to other tax-saving options. Being an equity fund, it would be appropriate to stay invested for a more extended period.
Best Tax Saving Investment Under 80C – This enables you to use tax deduction in EEE format under Section 80C, namely tax exemption, accumulation of assets and zero exit charges.
Monthly Investment Options – By using a SIP of less than Rs 1000, you can start investing. Also, there is no upper limit on the nvestment amount.
Higher returns than FD / PPF – Compared to standard FDs, ELSS offers higher returns to beat inflation efficiently.
Comparison with other tax-saving investments
Many different savings schemes are available, which help in some money development like FD, PPF and NSC. But the yield of these schemes is taxable. It is where ELSS (Tax Saving Mutual Fund) stands out with its dual benefits – typically higher yields and tax-free returns. It is combined with a lock-in period of just three years, which you are now investing in ELSS (Tax Saving Mutual Fund). Here’s a quick look at how ELSS is superior to other tax-saving investments that are often used: –
What is the maximum investment limit?
When we are talking about the best ELSS funds 2019 for tax saving purposes, we need to understand that the highest permissible investment limit u / s is 80C for a tax benefit of Rs 1.5 lakh in a fiscal year. Although it is possible to invest any amount in an ELSS fund, the 80C deduction is a limit of Rs 1.5 lakh.
Best ELSS Funds 2019
- Axis Long Term Equity Fund-Direct- Growth(ELSS)
- Aditya Birla Sunlife Tax Relief 96 – Direct-Growth (ELSS)
- Invesco India Tax Plan- Direct-Growth
I have considered the following factors while choosing the 2019 Top 3 Tax Saving Mutual Funds.
- Great yielding funds over the last five years and beyond;
- Funds that have provided more than 15 percent stable returns (CAGR) in the previous five years;
- Funds that bounced back and continued to grow during the market downturn;
- The fund with AUM is more than Rs 500cr
- Funds that hold more than 20 percent of their average AUM in the financial sector;
- Funds whose expense ratio is less than 1% or just little over 1%;
Can we invest in the best ELSS funds for more than 1.5 lakhs in 2019?
Technically, in investment over Rs. 1.5 lakh on Best ELSS Funds 2019, there is no such issue, but the maximum tax deduction under Section 80C is a maximum of Rs. 1.5 lakhs. It is an excellent time to invest in the Best ELSS Funds 2019 for long term wealth growth.