ELSS Funds

  1. Importance of Personal Finance
    1. Personal finance: Why Is It Important?
    2. what is personal finance explained with example
    3. Compound Interest and Simple Interest Understanding Personal Finance Maths
    4. compounding effect Understanding Compounded Returns with Formulas and Examples
    5. value of money Exploring the Concept of Present and Future Value in Personal Finance
    6. Future Value of money Formula How to Calculate with Example
    7. Retirement Tips for How to Save, Plan, and Invest
    8. Inflation how it Impacts Your Retirement Income with formula and examples
    9. Diversifying Portfolio for a Secure Retirement example of Investing in Multiple Assets
    10. Retirement Corpus example Strategies and Assumptions for a Secure Future
    11. mutual funds introduction
    12. Asset Management Companies:Understanding Structure and Roles in Mutual Funds
    13. NAV Net Asset Value Understanding the Core Concept of Mutual Funds with example
    14. Net Asset Value in Mutual Funds Fair Division of Profits and Investor Returns
    15. Mutual Fund Fact Sheet A Comprehensive Guide Unlocking the Secrets of MF Factsheets
    16. types of mutual funds schemes as per SEBI October 2017 Circular
    17. MultiCap Funds
    18. Focused Funds
    19. Dividend yield funds
    20. ELSS Funds
    21. debt fund A Comprehensive Guide to Understanding What are Debt Funds in india
    22. liquid mutual fund
    23. Overnight Fund all you need to know about Overnight debt funds
    24. liquidity risk in mutual funds
    25. Banking and PSU Debt Fund
    26. Credit Risk Funds
    27. GILT Funds
    28. Bond Financial Meaning With Examples and 5 types of bonds explained
    29. YTM Yield to Maturity definition and how to calculate
    30. Accrued Interest Definition and Example how to calculate
    31. Active vs Passive Investing for Better Return
    32. What Are Arbitrage Funds? · ‎Example of Arbitrage Fund
    33. mutual fund terms top 10 jargons to know before investing
    34. CAGR how to calcullate Compound Annual Growth Rate with formula
    35. Rolling Return Analyzing Mutual Fund Performance Over Time
    36. Expense Ratio What Is this fee And Why Does It Matter with examples
    37. Direct vs Regular Mutual Fund
    38. Benchmark in Mutual What It Is, Types, and How to Use Them
    39. Mutual Fund Risk Exploring Beta, Alpha, and Standard Deviation
    40. sortino ratio and Capture Ratios uses in Evaluating Mutual Fund Performance and Risk
    41. Mutual Fund Portfolio Guide for Financial success
    42. How to choose the best Mutual Fund for Your Portfolio by Evaluating Risk and Objectives
    43. Mutual Fund for beginners cheat sheet for Financial Success
    44. Smart Beta etf Exploring the Factors that Drive Return
    45. Asset Allocation and Diversification to Build a Balanced Portfolio
    46. Investment Vehicles Exploring the Evolution From Mutual Funds to ETFs
    47. GDP to Market Cap Ratio: Exploring the Link between Macroeconomics and Investments
    48. personal finance guide for Long-Term Success by Taking Control of Your Finances
    49. Personal finance Guide to Optimizing Your Investments and Achieving Your Financial Goals

ELSS funds or equity-linked savings scheme funds are a special kind of mutual fund that is eligible for tax exemption when invested in as per the guidelines of Section 80C of the Indian Income-tax Act, 1961.


You may be aware that section 80C of the income tax act offers the chance to lessen your tax obligation by considering certain investments and payments made throughout the financial year, with a maximum reduction in taxes reaching up to ₹1,50,000 each year.


If your total gross yearly income is Rs.1,200,000/- , investing Rs.1,50,000/- in 80C options will help to decrease your tax liability. This can lower your taxable income to 1,050,000/-.


Under section 80C, there are numerous investment options available to choose from, one of them being an ELSS mutual fund. You can opt for investing the entire amount of Rs.1,50,000/- in this scheme or divide it amongst other plans including Life Insurance, Public Provident Fund, five year FDs and Sukanya Smariddi Yojana.


It’s necessary to consider your financial strategy when deciding what to do. We can go into more detail as our module moves on.


Here’s how SEBI has defined ELSS fund-


Here are 2 things to note-


It looks as though the Government is aiming to encourage long-term investing habits with ELSS funds, thanks to their mandatory three-year lock-in period. A positive way of looking at it, I’d say!


ELSS funds are mandated to invest primarily in equity and related instruments. The market capitalization of stocks is unrestricted.


Many wrongly believe ELSS funds are a substitute for a large-cap fund, which is not wholly accurate. Generally, ELSS mutual funds could be taken as an equivalent of multi-cap funds. The data below clearly elucidates this –


These 40 ELSS funds have various investment concentrations. Here, you’ll find 23 having less than 70% in large-cap assets and the others with over 70%. Such as the IDFC Tax Advantage fund, which has a well-rounded mix of stocks from all market capitalizations.


When considering an ELSS fund, bear in mind your portfolio structure. For instance, choosing a large-cap fund such as HDFC Taxsaver would not be beneficial if you already have a substantial amount of large-cap stocks in your portfolio as 83% of HDFC Taxsaver is invested in this type of stock.


The performance of ELSS funds over the past decade can be seen as follows:


These are some of the leading funds in terms of assets under management. The average rate of return is estimated to be around 11-12%, which corresponds with the multi-cap fund’s performance.


After covering the basics of equity mutual funds, we will move on to comprehending debt funds and exploring their subcategories. Then, we can focus on learning how to select a mutual fund and construct a portfolio.