Best Elss Funds To Invest In 2023

Which ELSS is best to invest in 2023?

10 Top Performing ELSS Funds to Invest in 2023 –

Fund Name	3 Year Returns	5 Year Returns
Bank of India Tax Advantage Fund	22.20%	11.50%
Parag Parikh Tax Saver Fund	27.10%	20.40% (Inception)
Mirae Asset Tax Saver Fund (G)	23.20%	13%
DSP Tax Saver Fund	22.10%	11.70%
Nippon India Tax Saver ELSS Fund	20.80%	4.70%
SBI Long Term Equity Fund	24.20%	10.4%
HDFC TaxSaver fund	24.30%	8.80%
IDFC Tax Advantage ELSS Fund	28.20%	11.10%
ICICI Prudential Long Term Equity Fund Tax Saving	21.10%	10.20%
Canara Robeco Equity Tax Saver fund	21.20%	13.70%
Axis Long Term Equity Fund	10.40%	8.30%

Should I invest in ELSS in 2023?

Major Advantages – Here are some of the benefits of investing in the best ELSS mutual fund in 2023 :

Shortest lock-in period: The 3-year lock-in period of ELSS mutual funds is the shortest among other tax-saving investment options. For example, PPF has a minimum maturity period of 15 years. Hence, tax-saver fund schemes are more liquid.

Potential to generate high returns: Contrary to ELSS mutual funds, other tax-saving investment options, like bank fixed deposits and PPF, generate a fixed income. Conversely, ELSS funds invest in stocks of different companies, and their NAV fluctuates accordingly. An uptick in prices of such underlying securities can yield sizeable returns for investors. Tax benefit: Investments up to Rs.1.5 lakh are eligible for tax deductions as per the provisions of the Income Tax Act,

Investment modes: Two routes via which individuals can invest in the best ELSS mutual funds are – Systematic Investment Plan and lump-sum. SIP allows individuals to invest in a scheme by paying fixed instalments at regular intervals (monthly, quarterly, annually, etc.). On the flip side, the lump-sum method allows investors to allocate the available funds to an ELSS mutual fund scheme in one go.

Is it safe to invest in mutual funds in 2023?

Mutual Fund Investment: Still A Smart Choice In 2023 – Mutual fund investment in India is still a smart choice in 2023 for several reasons. Firstly, the Indian economy is expected to grow steadily, providing ample opportunities for investment in various sectors such as infrastructure, healthcare, technology, and consumer goods.

1. Mutual funds offer investors exposure to a diversified portfolio of such stocks and bonds, reducing the risk of investing in a single company or sector.
2. Secondly, the Indian government has introduced several policies and reforms to boost the investment climate in the country.
3. For instance, the introduction of the Goods and Services Tax (GST) has simplified the tax system and improved the ease of doing business.

Thirdly, the penetration of mutual funds in India is still relatively low, indicating significant growth potential. Lastly, mutual fund investments in India are regulated by the Securities and Exchange Board of India (SEBI), which ensures transparency, investor protection, and professional management of mutual fund schemes.

Diversification: Mutual funds invest in a portfolio of securities, which reduces the risk of investing in a single stock or bond. Diversification helps mitigate risk and simultaneously increase potential returns. Professional management: Mutual funds are managed by professional fund managers who have experience in analysing and selecting securities. They can help you make informed investment decisions with their expertise. Flexibility: Mutual funds offer a range of investment options, including equity funds, debt funds, balanced funds, and index funds, allowing you to choose options that align with your investment goals and risk appetite. Accessibility: Mutual funds are easily accessible to all investors, irrespective of their investment amount. You can start investing in mutual funds with a minimum amount as low as Rs.100 and can increase your investment as per your financial goals. Transparency: Mutual funds are regulated by SEBI, which mandates that mutual funds disclose their portfolio holdings and performance regularly. This transparency helps investors make informed decisions and track their investments’ performance. Tax benefits: Mutual funds offer tax benefits under Section 80C of the Income Tax Act. Investing in tax-saving mutual funds can help you save tax up to Rs.1.5 lakh in a financial year. Potential for higher returns: Over the long term, mutual funds have the potential to generate higher returns compared to other investment options like fixed deposits or savings accounts. However, it is important to remember that mutual fund investments are subject to market risks, and returns are not guaranteed.

Is it good idea to invest in 2023?

If you’re nervous – While Wall Street strategists appear pessimistic, groups like Goldman Sachs, JPMorgan Chase & Co, and UBS Asset Management believe the economy will defy expectations. It’s these conflicting views that make investment decisions so tough for many of us.

Certificate of deposit (CD)Money market fundsTreasury inflation-protected securities (TIPS)U.S. savings bondsAnnuities

Regardless of whether the market is up or down, the world keeps spinning. The wrong move is to be paralyzed by indecision and do nothing in 2023. Whether you trust the market to rebound or decide to accept a lower return on low-risk investments, it’s important to remain in the game.

Should I exit from ELSS after 3 years?

Some new investors are discovering the old practice of recycling investments in Equity Linked Savings Schemes or ELSS. They can’t stop talking about the smart strategy that would help them to save taxes without making any fresh investments. Simply put, these investors believe that selling ELSS soon after the mandatory lock-in period of three years and reinvesting the money again would help them to save them taxes.

1. The best part is you don’t have to allocate any fresh money for tax-saving investments.
2. Recycling ELSS investments is a very old practice.
3. Many investors used to believe that it is a smart way to save taxes.
4. Many financial planners and advisors used to scoff at the idea.
5. They used to always maintain it is not a smart strategy as some investors believe.

In fact. It will actually have a negative impact on their long-term wealth creation plans. Why don’t these pundits approve of this idea? One, they believe many investors make provisions for tax-savings investments under Section 80C at the beginning or end of the financial year.

• The smart ones start an SIP in an ELSS at the beginning of the financial year.
• The last-minute planners shop for tax saving investments in March.
• Investments in tax saving instruments like ELSS and PPF helps taxpayers to save taxes of up to Rs 1.5 lakh in a financial year.
• Mutual fund advisors fear many investors will use the recycling as an escape route.

Advisors say these investors will not allocate Rs 1.5 lakh that they would have invested in a tax saver fund otherwise. That is, Rs 1.5 lakh less investments every year. Assuming an annual return of 12%, an SIP of Rs 10,000 every month in tax saving mutual funds for 10 years would help you to build a corpus of Rs 23.23 lakh.

The exercise helps you to save invest Rs 12 lakh in 10 years. If your investments fetch 12% returns, you will make another 11.23 lakh in 10 years. So, you should never resort to recycling ELSS? Unless you are in a tough situation financially you should not do it, say advisors. If you can’t spare Rs 1.5 lakh in a year due to your financial situation, you can sell an old ELSS investment and reinvest it to save taxes.

However, you should be mindful about the disruption in your investment plan. Remember. ELSS can be a great wealth creation tool over a long period. Don’t look at it only as a tax saving tool. (Catch all the latest news about mutual funds, MF insights & analysis, best buys and investment trends on ETMutualFunds.com ) Download The Economic Times News App to get Daily Market Updates & Live Business News.

Is ELSS taxable after 3 years?

Since ELSS funds are locked-in for three years, there is no possibility of realising short-term capital gains. Therefore, you can realise only long-term capital gains. These gains of up to Rs 1 lakh a year are made tax-free, and any gains above this limit attract a long-term capital gains tax at 10%.

What happens to ELSS after 3 years?

Redeeming Lump Sum Investments From ELSS – When you invest in a lump sum amount in an ELSS, the lock-in period is calculated from the day the purchase is made. Hence, you can only sell the units of an ELSS fund after 3 years from the date of your investment.

Let’s understand with an example. Say, you make a lump sum investment of Rs 75,000 in an ELSS scheme on 10th September 2022. You can redeem all your ELSS units in one go after 3 years, that is, on 11th September 2025 when the lock-in period ends. You can redeem your ELSS lump sum investments in two ways.

One, you can raise a request online, by login into the mutual fund website and raising a redemption request. Similarly, if you had done it through an app, you can redeem your funds using the same app. Two, you can visit your local mutual fund branch, and raise a redemption request by filling up a form.

How many years should I keep mutual fund?

Equity mutual funds are long term investments and equity MF SIPs typically create wealth over the long term. That is still an extremely open-ended statement. What does long term mean? Does it mean 5 years, 10 years or 20 years? Are there triggers for you to exit your mutual fund holdings in a shorter time frame? Here are a few quick pointers.

For equity funds, long term wealth creation should be the driver. There are some basic conditions for long term wealth creation through the mutual fund route. Your holding period in mutual funds should be long enough for the investments made by fund managers to play out the story. A good business model takes time to translate into stock market returns and we need to give the fund managers the requisite time to help them realize this price appreciation.

Typically, well managed diversified equity funds have managed to outperform the index over a 5 years period but they have also outperformed other asset classes by a margin when a period of 10 years and above is considered. If you are actually looking at equity funds to help you achieve your long term goals then you at least need to give yourself a holding period of 8-10 years.

1. For debt funds, the outlook on rates should be your key driver for holding period.
2. Unlike equity funds, the debt funds do not really depend on long term holding.
3. Since they are invested in debt instruments, these debt funds are more inclined towards safety, stability and liquidity rather than returns over the longer term.

Debt funds are seldom used as a wealth creating mechanism and the key driver for them is the outlook on interest rates. When rates are expected to go down, it pays to extend your holding in debt funds and when rates are expected to go up then it pays to reduce your holding in debt funds.

Your holding period is determined by tax considerations. This is a very important consideration when it comes to taking decisions on holding period for mutual funds. For example,equity funds and balanced funds attract short term capital gains tax if they are held for less than 1 year. At 15%, the STCG can vastly change the economics of your post tax returns on the equity fund.

It pays to earn LTCG on equity funds as they are free of tax. The same logic applies to balanced funds too.However, the LTCG treatment is slightly different in case of debt and liquid funds. In this case, the definition of short term is up to 3 years. In case of debt funds, STCG is taxed at your peak tax rat while LTCG is taxed at 10% within dexation.

That is why most debt funds are structured as dividend plans to earn tax-free dividends. As a debt fund investor you can combine your timing of purchase in such a way that you get the benefit of LTCG and of extra indexation. Holding period will also be circumscribed by your goals. It does not matter whether your holding is in equity funds or in debt funds.

If the particular fund was invested in to meet a specific goal then the holding period of that fund should be limited to achieving that goal. In case you have bought a debt fund or liquid fund for a 3year time frame to meet the margin money for your mortgage loan, then that is what should be the holding period.

Similarly if your 10 year equity fund SIP is maturing in time for your daughter’s college installment, then that should be the holding period. When your specific goal has been achieved and a specific fund has been earmarked for the same, then don’t change your plan. You must trigger the exit as otherwise it will have an impact on the discipline of your financial plan.

Finally,it should boil down to a cost benefit analysis. Eventually, your mutual fund holding period has to also be determined by cost benefit analysis. The first question you need to ask yourself is that if your redeem your fund today then do you have alternate options to park the money in instruments that are similar or better? Secondly,many investors have the habit of switching around their holdings.

1. Remember,switching around has a cost in the form of entry costs that you will have to pay each time you move to a new fund.
2. That is best avoided unless you believe that the long term benefits of the switch are going to be huge.
3. Thirdly, there is something called an exit load that will work against you when you trigger your MF exit early.

An exit load is a levy on early exit of an investment in mutual funds and can either be 1 year or even 3 years. Normally, the exit load varies between 1% and 3% and can again alter the economics of your mutual fund investment. Lastly, mutual funds also attract securities transaction tax (STT)at the time of redemption to the tune of 0.125%.

Which mutual fund gives highest return in 1 year?

Best Mutual Funds to Invest in 2023 for 1 Year

S.No.	Fund Name
1.	Franklin India Short-Term Income Plan – Direct Plan-Growth
2.	Edelweiss Banking and PSU Debt Fund – Direct Plan-Growth
3.	Nippon India Short-Term Fund – Growth
4.	IDFC Bond Fund – Short-Term Plan Regular Plan-Growth

Should I exit from ELSS after 3 years?

Some new investors are discovering the old practice of recycling investments in Equity Linked Savings Schemes or ELSS. They can’t stop talking about the smart strategy that would help them to save taxes without making any fresh investments. Simply put, these investors believe that selling ELSS soon after the mandatory lock-in period of three years and reinvesting the money again would help them to save them taxes.

• The best part is you don’t have to allocate any fresh money for tax-saving investments.
• Recycling ELSS investments is a very old practice.
• Many investors used to believe that it is a smart way to save taxes.
• Many financial planners and advisors used to scoff at the idea.
• They used to always maintain it is not a smart strategy as some investors believe.

In fact. It will actually have a negative impact on their long-term wealth creation plans. Why don’t these pundits approve of this idea? One, they believe many investors make provisions for tax-savings investments under Section 80C at the beginning or end of the financial year.

The smart ones start an SIP in an ELSS at the beginning of the financial year. The last-minute planners shop for tax saving investments in March. Investments in tax saving instruments like ELSS and PPF helps taxpayers to save taxes of up to Rs 1.5 lakh in a financial year. Mutual fund advisors fear many investors will use the recycling as an escape route.

Advisors say these investors will not allocate Rs 1.5 lakh that they would have invested in a tax saver fund otherwise. That is, Rs 1.5 lakh less investments every year. Assuming an annual return of 12%, an SIP of Rs 10,000 every month in tax saving mutual funds for 10 years would help you to build a corpus of Rs 23.23 lakh.

1. The exercise helps you to save invest Rs 12 lakh in 10 years.
2. If your investments fetch 12% returns, you will make another 11.23 lakh in 10 years.
3. So, you should never resort to recycling ELSS? Unless you are in a tough situation financially you should not do it, say advisors.
4. If you can’t spare Rs 1.5 lakh in a year due to your financial situation, you can sell an old ELSS investment and reinvest it to save taxes.

However, you should be mindful about the disruption in your investment plan. Remember. ELSS can be a great wealth creation tool over a long period. Don’t look at it only as a tax saving tool. (Catch all the latest news about mutual funds, MF insights & analysis, best buys and investment trends on ETMutualFunds.com ) Download The Economic Times News App to get Daily Market Updates & Live Business News.

Is this the right time to invest in ELSS?

ELSS mutual fund schemes offer the shortest lock-in period to an investor looking to save tax. The investment in the ELSS mutual fund scheme comes with high risk. Here are the smart ways an individual can use to invest in ELSS mutual fund schemes and save income tax as well. – iStock While holding equity funds for long periods is a good strategy, investors need to monitor their portfolios as well. Out of many options available to an investor, an ELSS or equity-linked savings scheme comes with the shortest lock-in period. The ELSS mutual fund offers high returns, it has higher risk compared to other avenues like PPF, life insurance policies etc.

Here is a look at smart ways to invest in ELSS mutual funds to minimise the risk of investing. Grab the sip advantage Don’t invest in ELSS at one go at the end of the year. These are equity schemes and monthly SIPs are the best way to invest in these funds. But if you start in January, you can fit in only 2-3 SIPs before the end of the financial year.

“Ideally, a taxpayer should start an SIP in an ELSS fund from April through the whole financial year so that he does not get worried by the volatility,” says Raj Khosla, Managing Director of MyMoneyMantra.com. Check long-term performance Don’t be guided by the short-term performance of a scheme.

Look at the long term record before investing. “Investors should not only look at 5-7 years performance of a scheme but also how long the fund manager has been at the helm of the fund,” says Aditi Kothari, Vice-Chairperson and Head of Sales and Marketing, DSP Investment Managers. Assess portfolio attributes Not all ELSS funds are alike.

Some portfolios are focused on large-cap stocks while others have a good mix of large, mid and small caps, The portfolio mix also determines the risk and the rewards for investors. We have placed the top ELSS funds into three broad categories. Choose a fund that suits your risk appetite.

• Don’t go for dividend option Tax rules have changed in the past two years.
• Dividends are now taxable, as are long-term capital gains beyond Rs 1 lakh.
• While it is possible to manage and adjust the tax on capital gains, the dividends are added to income and taxed at normal rates.
• So, don’t go for the dividend option in your ELSS fund.

Keep monitoring performance While holding equity funds for long periods is a good strategy and helps build wealth in the long term, investors need to monitor their portfolios as well. Some of the ELSS funds in Roshan Aswani’s portfolio have not done too well.

HDFC Taxsaver and SBI Long-Term equity are long-term underperformers that should have been dumped some years ago. Which ELSS fund is for you? ELSS funds come in different flavours. Pick the one that suits your taste Very high risk : With over 40% of their corpus in mid-and small-cap stocks, these funds can be very rewarding in bullish times.

But watch out for the volatility. High risk: These schemes also have 30-35% exposure to mid-and small-caps. They will be less volatile but can be equally rewarding in rising markets. Moderate risk: These schemes have 75-80% of their corpuses in large-cap stocks so will not be very volatile. But returns will also be relatively sedate. Data as on 12 Apr 2022 | Source: Value Research ( Originally published on Apr 18, 2022 ) (Your legal guide on estate planning, inheritance, will and more.) Download The Economic Times News App to get Daily Market Updates & Live Business News. more less

Can I invest in ELSS for 5 years?

Advantages of Investing in ELSS Funds –

Dual benefit of tax rebate and wealth growth

ELSS is the only investment option that not only provides tax deductions under the provisions of Section 80C of the Income Tax Act, 1961 but also helps in wealth growth. The equity exposure of the ELSS funds gives you an opportunity to earn excellent returns on staying invested for at least five years.

Shortest lock-in period among Section 80C options

ELSS mutual funds come with a lock-in period of just three years, which happens to be the shortest among all tax-saving investment options under Section 80C of the Income Tax Act, 1961. Therefore, ELSS mutual funds are more liquid as compared to any other Section 80C investment.

Potential to earn inflation-beating returns

ELSS mutual funds are the only Section 80C investment option which has the potential to offer inflation-beating returns. This is what makes ELSS to stand out among all tax-saving investment options.

Expert money management

All mutual funds are handled by finance professionals called ‘fund managers’. These are individuals with an excellent track record of managing portfolios, and hold various certifications in the field of finance. Every fund manager is backed by a team of market researchers and analysts, who pick only the best-performing securities, which will benefit investors in the long run.

Option to invest monthly

You can start investing in the top ELSS funds using SIP of as low as Rs 1000. Moreover, there’s no upper limit on amount of investment.