Equity Linked Savings Scheme, commonly known as ELSS, is a type of mutual fund that enables investors in India to build long-term wealth and achieve returns that outperform inflation while also providing tax benefits under section 80C. ELSS funds have a three-year lock-in term and invest primarily in equity or equity-related securities. In contrast to conventional tax-saving investments like fixed deposits, the Public Provident Fund (PPF), and other post office savings schemes, ELSS funds are popular among investors seeking to reduce their tax burden and receive higher returns. Generally, when it comes to mutual funds, SIP is mostly preferred, but since the new financial year has already been started, investors looking for investing in ELSS funds which route should they prefer SIP or lump sump, let’s know from different industry experts.
Santosh Navlani, COO, ET Money
Investing via ELSS or lump sum doesn’t matter in mutual funds. Both are ways to invest in equities. SIP doesn’t have any special benefit over lump sum investments. Indian markets have maintained an uptrend in the long run, so if you just invest, you would do well. We have compared monthly SIP returns with annual SIP over different time periods (Refer to the two charts). While the returns in annual SIP were better percentage-wise, the final corpus was higher in the case of SIP. The reason is simple: In the SIP, the investor got a headstart of 11 months.
Ankush Bali, Financial Portfolio Manager- PGDBF | LIMRA | MDRT | AMFI REGISTERED
In FY24 investing Elss the best route will be Sip, lump sum can be done when there is a drastic fall in the market.