The Concept of Long Term Investment via ELSS

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Long Term Investment

ELSS is popularly known as the equity-linked saving scheme and is one of the best ways to make your money grow. There is always a surplus that remains after you are done with the necessities of your life and if not, make some forceful saving to ensure a healthy financial state even when you will not be clocked into the system of 9-5 work.

Saving is the best purpose of earning, and earlier one understands it, the better results he/she achieves. Now, the issue is, only saving money will not get you nearer to the desired results as the market will appreciate by the time you will reach the verge of retirement and the money you saved would seem to you to be inadequate in volume to match the standards then. Hence, the best way to use your savings is always to put it into productive investment. The more you invest, the more the money grows.

Make sure that the decisions you make while opting for specific investment are taken based on ample researches and market surveys or else your hard-earned money might also get reduced in volume leaving you with the bitter taste of loss. When there is a chance of return, there always remains a threat of losses as well. Investments that can fetch you multichannel benefits are the best for you and ELSS is sure one of those schemes that will bring you long term returns along with short term benefits.

So, what are you thinking of, get your money accumulated and invest in ELSS to reap out the best of it.  Let us first have a look at the characteristic of ELSS that makes it such a worthy source for investment.

The lock-in period

Most of the investors invest in equities to make money grow and hope to put it to some use when the return is gained. There is no value of money if it cannot be used when it is required the most. Hence, locking up your money for several years is never a good idea as it reduces your liquid freedom. If there is an emergency during the period, your money remains locked up, you will not be able to use it for your benefit, and as a result, your purpose of saving will remain unresolved. As far as ELSS is concerned, it does not have a long gestation period and your money goes into the locker for 3 years only. Of all the other equities available in the market that bear long term benefits, like the axis long term equity fund has the least lock-in period that makes it a must for every investor. Hence, if you are willing to make an investment that will benefit you with no loss of time, ELSS is the best choice to settle for.

The tax-saving benefit

Most of the investments when bear returns gets counted under the taxable income, and a substantial amount gets deducted at the end of every financial year making you lose interest in progressive investment. Unlike the many, ELSS does not have the problem of the tax burden; instead, it reduces the same with its tax saving feature. Surely there are other schemes available as well that offers tax saving on earning like the FDs, PPFs, NSCs, and NPSs abut sadly enough all of them come with a price of 5 and more tears of lock-in period. This is where ELSS stands apart from the rest of the investment portfolios. The same amount or even more at times can be achieved with the same amount of investment with a lesser locking period if you opt for ELSS.

Return Potential

No matter what you choose for your investment planning, the return is the one thing that decides your interest. There are multiple options there in the market offering varied levels of returns in the long run like fixed deposits, public provident fund, National savings Certificate, and national Pension Scheme. All of the schemes mentioned above have the potential to reap a return of 6.5-10% over a long lock-in-period. As compared to all of these, ELSS has a shorter gestation with a higher potential return. With market volatility and speculation playing the primary role in deciding the fate of the ELSS, the returns can be as high as 15-18%. You will undoubtedly wish to make your money bigger in volume in less time and to do the same, ELSS would be the best choice with higher returns and less tax.

Taxation

The amount you invest in ELSS is tax deductible under IT act 80C like many other long term investments. The good part is, the amount you receive as the return is partially taxable and the long term capital gain on ELSS stands exempted from the taxes when amounts up to 1 lakh. Compared with other long term options, ELSS enjoys a better position and can thus be a good option for investment for all.

SIP availability

Sometimes, it might not be possible for people to save in bulk and invest, In order to combat this difficulty; there is an arrangement of SIP that allows an investor to plug in a regular stream of money into the schemes and to make fortune out of it. An amount as low as Rs. 500 can also be accounted for to start your initial investments through SIP. When you take a look around, there are other investments options available as well, but they only allow lump sums for long term returns. Hence, even if you do not have ample pile of money to invest and look forward to earn some benefits and capital gain, with ELSS you can easily get into the stream of investment minus any hassle. If you think that FD can be a great solution for your future, you need to be ready with a substantial amount that will get locked for a considerable period of time as well. Choose ELSS that grants you the liberty to select your convenient amount of investment with the tax benefits and a shorter gestation period.

When it comes to investment, there is always an element of risk associated with it, No matter what avenue you choose to make your money grow, the more the returns promised, the higher is going to be the level of risks attached with it. The same rule applies to the ELSS as well. But, if you are ready to take the risk and make your fortune out of it, there is a substitute for ELSS. You need to understand that ELSS is a speculative market instrument unlike the other counterparts of it and thus carries higher return potentials along with a risk element in it.