Are you considering how to open an ELSS account? ELSS, or Equity Linked Savings Schemes, are a great investment option and provide a variety of benefits. By investing in ELSS, you can take advantage of the tax benefits they offer while also diversifying your portfolio.
In this blog post, we’ll explain what an ELSS account is, how to open an ELSS account, and why you should consider investing in an ELSS.
What is an ELSS account?
An ELSS (Equity Linked Savings Scheme) account is a mutual fund investment option that offers investors the potential for long-term capital appreciation with tax benefits. ELSS funds are invested predominantly in equity markets and offer tax deductions of up to Rs 1.5 lakhs under Section 80C of the Income Tax Act, 1961. It is a great way to save money and get higher returns on your investment.
ELSS funds have a lock-in period of three years, which is the lowest among all tax-saving investments. This means that you must remain invested in the fund for three years before you can withdraw your money.
ELSS funds also have the potential to generate higher returns compared to other traditional tax-saving instruments like fixed deposits or Public Provident Fund (PPF). They are managed by experienced fund managers and are known to have higher risk levels than other mutual funds.
If you’re looking to invest in ELSS funds, it is important to remember that past performance is not indicative of future results. Also, since these funds are exposed to market volatility, it is recommended that you evaluate the fund carefully and choose an option that suits your risk profile and financial goals.
If you’re a beginner investor, opening an ELSS account is quite simple. All you need to do is choose a reputed fund house, pick a scheme, fill out the application form, submit the necessary documents, and make the initial deposit.
After that, you can start investing in mutual funds via your ELSS account. As with any other investment, it is important to assess your financial goals, risk appetite, and investment horizon before choosing a particular fund. Doing this will help you make the most of your investments in the long run.
The benefits of an ELSS account
ELSS, or Equity Linked Savings Scheme, is a type of mutual fund that has both tax benefits and the potential for capital appreciation. An ELSS account is an excellent option for those looking to save money on taxes while also investing in a well-diversified portfolio of stocks.
The primary benefit of investing in an ELSS is the tax benefit. ELSS investments are eligible for a tax deduction under Section 80C of the Income Tax Act. This means that investors can reduce their taxable income by up to 1.5 lakh rupees in one financial year by investing in an ELSS. This makes ELSS investments attractive to individuals looking to save on taxes.
In addition to the tax benefits, investing in an ELSS also provides investors with the potential for capital appreciation. As with any investment, the value of the investment can go up or down, and ELSS investments are no different. However, by investing in a well-diversified portfolio of stocks, investors have the opportunity to benefit from market growth and potentially earn returns on their investments over time.
Investing in an ELSS also allows investors to benefit from the power of compounding returns. By reinvesting their earnings over time, investors can benefit from the additional growth generated from their invested capital. Over the long-term, this can help to build wealth more quickly and efficiently than other investments such as fixed deposits.
Overall, investing in an ELSS account is an excellent way to save money on taxes while also taking advantage of the potential for capital appreciation and compound returns. It is an ideal option for those looking to invest their money and grow their wealth in a tax-efficient manner. There are various ways in which investors can open an ELSS account.
One way is to find a broker who offers the product. Investors should then follow instructions provided by the broker, providing information like name, address and bank details for electronic funds transfer among others. Alternatively, there may be options available through a company’s employee stock purchase plan or 401k plans offered by large companies like Walmart.
If you’re interested in opening an ELSS account but need help figuring out where to start, consider contacting your employer’s human resources department or visiting its website directly to learn about its offerings.
How to open an ELSS account
An Equity Linked Savings Scheme (ELSS) is a type of mutual fund investment in India that offers investors a tax-saving option with the potential for higher returns. ELSS funds invest primarily in equity markets, but may also invest in debt and money market instruments.
Opening an ELSS account is relatively simple.
Most fund houses require investors to fill out an application form, which must include all the relevant personal information. Once the investor has submitted the form, the fund house will open an account and process the investor’s subscription request.
Depending on the fund house, investors may need to provide additional documents, such as bank statements, to verify their identity and address.
Once the account is opened, investors can deposit funds into the account and start investing. Investors should note that ELSS investments have a minimum lock-in period of three years, so it is important to understand the scheme before investing.
ELSS funds offer investors the opportunity to benefit from long-term capital gains, since any profits earned after three years are tax free. Additionally, investments in ELSS funds are eligible for tax deductions up to Rs 1.5 lakh under Section 80C of the Income Tax Act.
This makes ELSS a great investment option for those looking to save on taxes while also potentially earning higher returns than fixed deposits or other traditional savings instruments.
Investors should always remember to research the funds thoroughly before investing, as different fund houses offer different levels of risk and return. As with all investments, investors should aim to diversify their portfolio by investing in different funds to reduce risk and maximize returns.
For example, a 35 year old investor could allocate 35% of her retirement corpus to an ELSS fund with lower risk and higher liquidity requirements. For the remainder of her retirement corpus, she could put 50% into a public provident fund (PPF) with low volatility and high liquidity requirements and 15% in a balanced fund providing exposure to stocks, bonds, cash/money market instruments.
The bottom line
Investing in Equity Linked Savings Schemes (ELSS) can be a great way to boost your savings, as they offer you the opportunity to invest in the stock market while also taking advantage of tax savings. However, getting started with ELSS can seem daunting, and there are a few steps you need to take before you can open an ELSS account. In this article, we’ll explain how to open an ELSS account and why it’s worth considering.
The first step in opening an ELSS account is to select a fund house from which you wish to purchase the ELSS funds. This can be done through online portals such as Groww or through direct mutual fund houses such as Axis Mutual Fund or ICICI Prudential Mutual Fund. Once you’ve chosen a fund house, you will need to complete the online application form and upload necessary documents for KYC verification. This can include a valid government ID, PAN card, and recent passport-size photograph.
Once your application has been approved, you will be asked to make the initial payment. Most fund houses accept payments through NEFT, UPI, and debit cards. After the payment is processed, your ELSS account will be activated and you will be able to start investing. You may be required to submit a nomination form to nominate someone who will receive the proceeds of your investments upon your death.
The main advantage of investing in ELSS funds is that they are eligible for tax deductions under Section 80C of the Income Tax Act. This means that any investment up to Rs 1.5 lakh per financial year can be deducted from your total income, reducing your tax liability. Additionally, ELSS funds have a lock-in period of three years, so any returns made on them are exempt from taxation until the lock-in period ends.
Overall, investing in ELSS funds is a great way to save money while taking advantage of tax benefits. By following the steps outlined above, you can easily open an ELSS account and start reaping the rewards of investing in the stock market. So don’t wait any longer; open an ELSS account today and start building wealth for your future!