Investments in ELSS qualify for tax deductions under Section 80C of the Income Tax Act, allowing investors to reduce their taxable income by up to ₹1.5 lakh annually.
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Equity Exposure
ELSS funds primarily invest in equities, offering the potential for higher returns compared to traditional savings instruments due to their equity market exposure.
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Lock-In Period
ELSS funds have a mandatory lock-in period of 3 years, during which the invested amount cannot be withdrawn. This encourages long-term investing and helps in wealth accumulation.
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Diversification
These funds invest in a diversified portfolio of stocks across various sectors and industries, which helps in spreading risk and potentially enhances returns.
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Professional Management
ELSS funds are managed by professional fund managers who make investment decisions based on market research and analysis, aiming to achieve optimal returns.
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Systematic Investment Plans
Investors can invest in ELSS through SIPs, allowing them to contribute a fixed amount regularly. This approach helps in averaging out the cost of investment.