Tax saving is synonymous with the end of financial year. Most tax saving investment are made between January and March. A lot of agents and salesmen of LIC, ULIP, etc. become active during this period and shrewdly use your sense of urgency to push poor tax saving products. Should you really push tax saving till the end of the year? Why stress out at the end when you can figure out everything at the start? We are just in the 3rd month of the financial year and it’s not too late to start investing for tax saving. Starting monthly SIP in ELSS Tax Saving Mutual Funds is the most convenient and efficient way to do your Section 80C tax saving. Read on to find out how.
Benefits of monthly SIP in ELSS Mutual Funds
Investing through monthly SIP in ELSS Mutual Funds gives you time to plan properly. The benefits are:
- Better Planning & Research: You can escape all the hassle of tax saving at the end of the year by dedicating a little time now. It also helps you learn more about the various products available in the market before zeroing down on one. It saves you from unscrupulous insurance agents.
- Avoid Pressure of HR Deadline: No more missing HR deadlines. Investing in SIP ensures that you are ready with all proofs when you the get the tax proof submission email from HR. If you have a running SIP in ELSS funds, future SIP are acceptable in tax proofs.
- Convenient to arrange funds: It is more convenient to invest ₹12,500 per month instead of arranging ₹1.50 lakh at one go in January or March.
- Avoid incorrect market timing and get better returns: SIP in ELSS mutual funds prevents you from the burn of incorrect market timing. If markets are high like they were in January 2018, investing a large lump sum amount in ELSS mutual funds at that time will give you sub optimal returns. In general, SIP would fetch you better returns than lump sum ELSS investment.
- Continue over years: Once you start your SIP in ELSS mutual funds, they can run month on month over years. You would never have to bother about Section 80C investments again.
Make a list of your expenses that qualify for 80C deductions and see how much has to be invested in tax saving funds to be eligible for an entire Rs 1,50,000 tax exemption. We at Upwardly can help you calculate how much has to invest for the purpose of tax saving. Click here to know how much you have to invest for tax saving.
Learn disciplined investing
Once you have figured out which funds to invest in for saving taxes, all you need to do is set up a SIP every month. One can practice financial discipline through this. Setting up a SIP of the funds will not only help you to practice regular investing but also will help you earn returns on your investment every month. A monthly investment will help you spread out your tax saving expenses and reduce the burden at the end of the year.
High returns potential
One doesn’t have to compromise on returns just because you are saving taxes. Upwardly Tax Saving Plan has delivered 15% p.a. returns in the last 3 years and 20% in last 5 years. This is higher than the return from any of the other tax saving instruments like PPF, FD, NSC etc. The top ELSS mutual funds have historic annualized returns (5-year) up to 22% in the last 20 years.
Pick up a minimum of 2 funds
It is never advised to put all your money in one place. Diversification is the key to reducing the risk in a portfolio. Despite being for the purpose of tax saving, you should be mindful of mitigating markets risks in mutual funds. We at Upwardly will help you with the best performing funds in the ELSS (Equity Linked Saving Scheme)/ tax saving category.
Benefit from Market Volatility with ELSS SIP
The Indian stock market is facing volatility in the wake of global economic events and domestic political uncertainty. This volatility is a boon for the SIP investors. Volatility coupled with SIP investments will lower the average cost of your investments. When the markets are down, mutual fund NAV goes down and you get more mutual fund units. When the market eventually goes up in the long term, all units grow. The units you accumulate during low markets grow even more. Thus, stock market volatility leads to higher SIP returns. Like other SIP, SIP in ELSS Mutual Funds also benefit from volatility in markets leading to higher returns in the long run.
We have seen how starting SIP in ELSS tax saving mutual funds is hassle-free and improves your returns. For your Section 80C tax saving investment, you do not need to look beyond SIP in ELSS mutual funds.
Know how much can be saved from being paid in the form of taxes. Check out the top tax saving mutual funds at Upwardly. Happy Investing!