What is ELSS and What to Consider When Investing in ELSS – Indian Money
If you are wondering what ELSS stands for, then it refers to Equity Linked Savings Schemes. These are considered diversified funds which are primarily invested in equity related investments. The good thing ELSS is that here investment is made in companies that have strong business model and a very good growth potential.
Let us look at Indian Money review of aspects you need to check before making an investment in ELSS.
IndianMoney.com Review of ELSS
Many people get scared when they hear that investment will be made in equities. But, on the contrary, you get the assurance of better returns when you make investments for a longer period of time.
Our focus here will be on analyzing few things that you need to keep note of while investing in ELSS.
Types of ELSS
As per Indian Money CEO, C S Sudheer, there are two types of ELSS, one is known as dividend funds and the other is called growth funds.
You can make an investment in two ways; as a lump sum amount or through SIP where fixed amount is invested on a monthly basis. This way you get the advantage of rupee cost averaging.
As an investor you need to be aware of the fact that there is a lock in time period of 3 years for this type of investment. However, the good thing is that ELSS has shortest lock in since PPF has a 15 year lock-in and NSC has 5 years lock in period.
Additionally, if you are able to hold the investment for seven to ten years then you can expect better returns.
You need to be aware of the fact that investment in equity funds is always risky and a fluctuation in Net Asset Value (or NAV) is always a possibility. Thus, the best thing to do is to make a long term investment.