When it comes to investing your money, mutual funds and ELSS (Equity Linked Saving Scheme) are two popular options that many people consider. While both mutual funds and ELSS are types of investment that allow you to invest in a diverse range of assets there are some key differences between the two.
Mutual funds are a type of investment that pools money from multiple investors and invests it in a variety of assets such as stocks, bonds, and other securities. Mutual funds are managed by professionals who make investment decisions on behalf of investors. They are a great option for people who want to invest in the stock market but don't have the time or expertise to manage their own portfolios. Mutual funds can be made through a lump sum or through a Systematic Investment Plan (SIP), which allows investors to invest a fixed amount of money at regular intervals.
On the other hand, ELSS is a specific type of mutual fund that is designed to provide tax benefits to investors under section 80C of the Income Tax Act. ELSS invests primarily in equities and has a lock-in period of three years. This means that the investors can not withdraw their money before the end of the lock-in period. ELSS is a popular option for investors who want to save on tax and also want to invest in the stock market.
One of the biggest advantages of ELSS over traditional mutual funds is the tax benefits that it offers. ELSS investments are eligible for a tax deduction of up to 1.5 lahks under section 80C of the Income Tax Act. Additionally ELSS have a shorter lock-in period of three years compared to tax-saving investments such as the Public Provident Fund (PPF), and the National Pension Scheme which have a lock-in period of 15 years and 10 years respectively.
In conclusion, mutual funds and ELSS are viable investment options that can help you grow your wealth over time. Mutual funds are a great option for those who want to invest in a diverse range of assets while ELSS is great for those who want to save on taxes while also wanting to invest. It is important to do your research before making an investment decision to ensure that you make the best choices for your financial goals. To experience the best-personalized services for your investment goals you can create an account with FundsIndia.
