Start investing in ELSS regularly right away through SIP

Investing in ELSS regularly gives benefit of cost averaging, better returns & helps to avoid year end hassles.

Being an investment option that gives full tax advantage with shortest lock in period makes Equity Linked Savings Scheme (ELSS) of Mutual funds the most attractive choice compared to any other tax saving instrument. We often see majority of us in a hurry to invest during the last month of every financial year to save your taxes. Is this the right approach?

Decisions taken in a hurry have higher chances of being wrong since they do not allow ample time to analyse and choose a plan appropriate for our needs.  Investing in ELSS is no exception to it. Also, no one can time the market irrespective of who they are.  Recently you might have noticed even Jim Rogers (Investment guru) said that he missed the bus on Indian equity bull run.

So, how to invest in a disciplined manner?

Mr. Patel is a smart investor, he plans his tax well in advance rather than waiting for the last minute. He invests in ELSS through monthly SIP. Not only he enjoys better returns but also benefits from ‘Rupee Cost averaging’. Become a smart investor like Mr. Patel today. Let us help you understand the secrets of Mr. Patel.

SIP is the approach that we suggest you to take to be disciplined in the market. SIP means Systematic Investment Plan. In a SIP  instead of a lump sum the investment is done regularly on specific intervals either weekly or monthly or quarterly. While weekly investments might be cumbersome and Quarterly investments will be a Mini lump sum way of investing the best mode would be going for monthly SIP. Here you will divide your planned lump sum investment into 12 equal parts, say if you plan to invest ₹1,20,000 in March as a lump sum, in a SIP you will invest ₹10,000 per month.

By Investing in ELSS through SIP you invest small amount of money at regular intervals there by making it a part of monthly spend. Being regular every month will make you disciplined towards investing. This would help you in accumulating wealth over long term without much burden.

Compounding & Averaging

By Investing in ELSS through SIP you buy regularly irrespective of NAV, so in a long run higher and lower NAV gets averaged and you minimize the risk of negative returns during bear market. Hence irrespective of a bull market or bear market you benefit from SIP.

Here is an illustration how you could have been 10-13% richer just by doing an SIP instead of waiting for last moment. 

SIP comparison for Investing in ELSS

Start investing in ELSS regularly right away through SIP and get better returns #MutualFunds Click To Tweet

Let us take the example of Axis long term equity fund, if I had bought this fund on 17th march to save taxes I would have bought it at an NAV of, so for an investment of ₹1,20,000 I would have got 3270.325 units. Whereas if I have been disciplined and invested the same amount of ₹1, 20,000 divided across 12 months, I would have invested ₹10,000 per month and so there would have been a rupee cost averaging happened over a period of 12 months, so I would have accumulated 3623.897 units in my folio which is 353.57 units extra when compared to lump sum investment. Based on current NAV value (36.694) I would have earned ₹12,974 (11%) extra.

Based on above example, it very evident that being disciplined not only brings the burden of investing a lump sum amount in a hurry, rather it makes you invest with ease and average your buying cost.

Hassles of last minute investing vs. Ease of investing in ELSS regularly

Waiting for the last moment to save tax can involve lot of hassles and glitches which might cost you dearly. Some of the examples of last minutes glitches are:

  1. Transaction failure.
  2. Issues with cheque such as there might be a signature miss match in hurry or any spelling mistakes that you did not notice initially.
  3. You were not able to invest on time due to any other personal issues

Whereas  if you start early with a SIP you have ample time to plan and avoid the above issues.

So what are you waiting for, start investing in ELSS through SIP’s and manage your portfolio in our WealthTrust app from today to reap the benefit of compounding.

Visit our website to know more about WealthTrust. Do read our other blogs on Mutual funds.


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