Equity Linked Savings Scheme or in short, ELSS is a popular tax saving mutual fund and is a type of equity fund that qualifies for a tax deduction of up to Rs.1.5 Lakhs per year. ELSS offers tax efficiency with a lock in period of three years and also tax free dividends for those choosing dividend options. Those invest in ELSS funds gain excellent and substantial tax free returns. It is true that equity linked savings schemes have gained tremendous popularity over other tax saving options for a number of reasons.
Systematic investing in
Mutual funds (SIP) is the answer to prevent pitfalls of equity investment with
the benefit of high returns. The SIP calculator shows how small investments
that are made at regular intervals yields better returns over a long period of
time.
Advantages
of Investing in ELSS:
ELSS is a type of equity fund that helps with
tremendous tax deduction annually under the Income Tax Act, Section 80C. There
are a number of benefits in investing in ELSS, those are
a. Lock-in
period: An Equity Linked Savings scheme has the shortest lock in period for
three years, among all the other tax saving investment options.
b. High
Returns: ELSS is a leading Market linked instrument that offers a higher return
than conventional tax saving instruments such as PPF, fixed deposits, National
Scheme Certificate and so on.
c. Taxation:
Apart from qualifying for a tax deduction of up to Rs. 1.5 lakh under the
section 80C of the Income Tax Act, ELSS offers long term capital gains that are
tax free up to one lakh per annum.
d. SIP
Option: The ELSS is the main tax saving instrument that comes with a SIP
option. The SIP helps the investors to invest at a very minimal cost along with
the benefit of compounding power.
ELSS
Calculator:
ELSS is an open ended equity fund that is not just
great for tax saving purposes but also creates an excellent growth opportunity
for the investment. These schemes are favored by the Government of India to
inculcate the habit of long term investment among the citizens. A major portion
of the fund in this ELSS gets invested in equities and equity related products.
It is mandatory to determine the performance of the investment before investing
in that, this is best performed by the tool known as the ELSS
calculator.
This calculator is a helpful tool that plays a major
role in helping people take the right decision in lieu of choosing the best
investments in the ELSS scheme. The tool helps the investors to evaluate the
effectiveness of an investment. There are a number of such calculators
available for
investors, depending on the type of scheme they
choose.
SIP
and ELSS calculators
One good protocol to avoid any pitfalls in investing
in equities is systematically investing in mutual funds. Such systematic
investments serve well with good returns. Even small investments made over the
course of time at regular intervals yield good returns over a long time period.
That’s exactly the reason why SIP has become one of the popular choices of
investments. SIP ensures that both large and small investments that are made
periodically are managed by professional managers.
For those interested to invest in mutual funds SIP
then it is important to understand the nature of the investment and estimate
its net worth at the end of the tenure. Such a figure is best obtained through
an ELSS SIP calculating tool. This calculator will project the returns offers
by the SIP exactly irrespective of the nature of the funds, be it debt, equity
or hybrid funds. The investor has to populate all the relevant details such as
the amount of investment, its tenure, expected rate of returns, etc., before
using the SIP calculator, to help it generate the estimates rate of return for
the investment.
The calculator works based on the input offered by the
investor and thus should be considered as an estimate and not as an absolute
value. Some factors such as inflation also come to play in determining the
maturity value of the SIP. But ultimately, this tool plays a vital role in
getting the estimate for an investment tentatively.
Past
Performance SIP calculator:
This is a significant tool that offers insights on the
historical performance of the SIP. This calculator takes into account certain
details such as the amount invested in SIP. Starting and finishing period of
the SIP, valuation date, maturity month and year of the SIP, and the name of the
asset valuation company. With these details, the calculator will generate the
estimate the worth of the SIP investment at the time of the maturity.
Such evaluations are important to determine how fun
will perform at different market cycles. The long run performance throws good
insight into learning where the fund will head in terms of future prospects.
The past performance is not a guarantee to the returns in the future, but they
help by showing how the fund will grow in different market conditions including
the most adverse ones.
Tax
savings with the help of ELSS calculator:
The Indian Income Tax act permits the individuals to
have a tax exemption of Rs.1.5 lakhs under the section 80C if they make certain
eligible investments.
The tools help to calculate the extent of eligible investments that the user
has already made in the financial year and the extent of tax that the user can
save by maxing out the 80 C limit. This tax
saving SIP helps the investor with the top equity linked savings schemes based
on the performance of the equity over the course of five years.
Final
words:
The ELSS calculator will provide with the estimation
of how much the fund is worth or how much the investor will invest every month
to reach a certain target. This calculator will shed light on how the fund has
fared over the years historically. Neither of the calculators should be taken
as an absolute value, as the market conditions will not get factored while
calculating.
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