SIP in Equity Linked Saving Scheme (ELSS)

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ELSS and SIP is like apple with oranges. You cannot compare. There are many kinds of Mutual funds and ELSS is one of them. But you can either choose to invest lump sum amount or go via SIP to invest in ELSS. For additional details on ELSS you can refer ELSS or Equity Linked Savings Scheme. Hence, you can earn high returns and also save taxes. So returns are depending on market risks. You can check out a few good ELSS Schemes to invest in 2017.

How to invest in ELSS through SIP

Investing in Equity Linked Saving Scheme (ELSS) through (SIPs). Moreover, many people invest lump sum amount in month of March every year to avoid tax. But lump sum investment can be dangerous as market undergoes ups & downs. In March if market may bull and it goes bear for next year. So your returns will be lower. If you invest in SIP then you will get rupee cost averaging

However, SIP options offered in MF schemes are better for investing in equity for long term. Therefore you will get rupee cost averaging. And it reduces average cost to get advantage of power of compounding. Rupee cost averaging specific rupee amount Invest at regular intervals of unit price.

As result, your money buys more MF units when price is low. And you will buy less units when price is high. This mean lower average cost per unit over time. Moreover, Rupee cost averaging allows you to discipline yourself by investing every month or quarter. Hence, keep in mind there is lock-in of 3 years. That means every SIP installment will get locked for 3 years.

For example, if you choose to do monthly SIP for year from 1st June 2017.  And last payment will be on 1st May 2018. But first payment lock-in period will over in 1st June 2020. Hence, last payment will be on 1st May 2021.

ELSS and SIP are two different things

However, ELSS is type of mutual fund with locked-in for 3 years. But investment in ELSS is tax-free under 80C like PPF. And also returns in ELSS are also tax-free. However, SIP (systematic investment plan) is best way to invest in mutual fund on regular basis. So, you have to invest every month for at least 6 months in mutual funds. Hence, you can choose the growth plan or the dividend plan.

Therefore ELSS is best way to grow your money and save tax at same time. Moreover, ELSS is best way to invest through SIP mode. Hence, both will go hand in hand. Probably, SIP saves stress of investing once in year or quarterly. In addition, lump sum amount is not ideal way of going about your investments.

Similarly, there are no additional charges to pay to start SIP. And it provide efficient services for stopping SIP’s is quick and easy manner. You can make investment by just paying Rs.500 in SIP. But depend on your convenient you can choose every week, month or quarter.

If you are first time investing in ELSS mutual fund. And SIP mode of transaction is more beneficial. But SIP is perfect to invest ELSS funds for First Time. Because, Investments are made in ELSS Funds using SIP are done through ECS or Electronic Clearing System.

Investing in ELSS Funds be Beneficial Using SIP

Most important benefits of using SIP to invest in ELSS Funds. Therefore SIP process is very easy. SIP’s will start at any point of time. Further, this is one of hassle free way of carrying out financial transactions online. But you can make your investments from home or office.

Additionally, option of invest in SIPs (Systematic Investment Plans) makes investing in ELSS flexible. And ease risk of investing in equities. In ELSS funds you can invest as low as Rs 500 on one time lump sum. Apart from risk, investing through SIPs in ELSS provide benefit for power of compounding.

Finally, look at fund details like fund manager investment approach and portfolio of fund. And you can check out Best ELSS Tax Saving Mutual Fund. Therefore check what best mutual fund to invest through SIP is. Hence, you shall see whether your mutual fund has qualities of best ELSS.

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