What is ELSS & How to invest in ELSS funds?
What is ELSS?
ELSS is a diversified equity mutual fund that qualifies for tax exemption under section 80C of income tax act. ELSS comes under EEE tax status, has a low lock in period of 3 years and high growth potential as it is an equity based instrument.
Who can invest in ELSS?
All individuals and HUFs are eligible to invest in ELSS mutual funds. NRIs can also invest in ELSS. However certain AMC’s doesn’t allow NRI’s from Canada/USA to invest in India due to complex taxation policies in USA/Canada. Let us see for whom ELSS is most suited.
- Youngsters who have just started their career.
- Any investor who has an investment horizon of at least 10 years.
- Investors who aim for high returns that beat inflation
- Investors who want tax savings with high liquidity with flexible time horizon.
- Senior citizens with taxable income and an investment horizon of more than 5 years.
Systematic investment or Lump sum?
You can invest a lump sum or do an SIP in ELSS funds. Systematic investment plan i.e. SIP does have a few advantages. These are:
- Avoid last minute pressures to invest during March.
- By Investing 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 a bear
- It creates discipline in your investment which is needed to plan your 80C investments.
Any Lump sum amount that you have can be used to buy a Liquid fund with same AMC you choose to have ELSS investments and do use STP facility for ELSS.
How to Invest in ELSS funds (Direct plan) on the WealthTrust app?
WealthTrust app removes the hassles of filling up multiple forms and slips for account opening and transactions. You can invest in schemes of 26 different fund houses (AMCs) through WealthTrust.
Investing through the WealthTrust app is as easy as shopping at flipkart or amazon. All you need to do is a 3 step simple process.
- Download WealthTrust app
- Fill the sign up form with basic details
- Upload the following: PAN, Bank Account Proof*: Cancelled cheque/Bank Statement, Selfie
*The proof must have your name, IFSC and MICR code printed on it.
Once you complete this process your Investment Account will be opened in 1-2 working days. You can invest a lump sum amount once your investment account is opened. You can also set up a SIP though to start a SIP a one time mandate is required which gets approved by your bank and takes 20-25 days to get approved. Once you place the request for a SIP we send you the mandate which you have to sign and send back to us. Post approval from the bank your SIP starts. This is only one time mandate, and any more SIPs that you want to start do not need any mandate approval.
You can switch your regular funds to direct funds also, without even opening an investment account. There are other methods of investing too which include AMC Websites, other online portals or offline investments through agents, however, at WealthTrust, we assure you of the best services. The basic plan of WealthTrust is free and we don’t have any hidden charges and we invest only in Direct plans. WealthTrust provides an excellent research advice to its customers and helps them to manage their portfolio with ease.
You may check our 5 things to know about ELSS blog to check more about ELSS funds.
You may even check Top 3 ELSS funds to invest in 2018-2019
New to Mutual Funds? Learn more about basics of mutual funds.