Financial planning is a vital cog in the wheel for each and every household. But to avail the services of a financial planner does not seem to be a feasible option for each one of us. Under the banner of mutual funds on how to open ELSS account seems to be a perfect option. This is a type of mutual fund where investment is made in equities. In addition it also provides you with deduction of 1, 50, and 000 under section 80 C of the Income tax act of 1961.
The reasons why you need to stick to ELSS
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When you compare it to the traditional investment option like PFF, or NSC, the ELSS account has a lock in period of 3 years. In case of the former it is 15 years and 8 years respectively. Though with an ELSS the shortest lock in period of 3 years is assured.
A chance to invest in SIP
To avail a mutual fund subscription a systematic investment plan is a key component. It means you invest small and fixed sum of money at regular intervals of time. This proves to be an important investment tool where you can go on to preserve capital and foster better wealth creation potential.
Better rates of return PFF or any other financial instruments
As the concept of ELSS is to make an investment in stock market, on the basis of performance of shares you can calculate the returns. When you compare the returns that are high in comparison to PFF. Hereby for a period of 3 to 5 years, the average rate on investment could be 20 %.
Start with a low sum of Rs 500
The main reason on investing in mutual fund is that you can start with as low as Rs 500. This woculd work out to be an initial form of investment.
Tax benefit
As already claimed investment in ELSS can claim deduction up to 80 C of the Income tax act.
Better transparency
When you are with ELSS there is a high level of transparency because you are aware of the transaction details of every transaction that works out to be part of your investment break up.
Transaction process is easy
When you have access to net banking you can go on to subscribe any mutual fund online. This avoids the hassle of paying a visit to the nearest branch or there is no need to submit any documents.
No need for any knowledge about a stock market
There is no need for any comprehensive knowledge about the stock market or even the mutual funds. The latter is being managed by the financial experts or fund houses who are going to deal on your behalf. They are going to outline a situation where the fund achieves a break even point from an investment point of view. The time horizon also seems to be of utmost importance. If you have a time frame of 5 years it is always better to invest in equity based schemes.
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