Top 5 ELSS Funds to Invest in 2022 | 5paisa Blog | 5paisa (2024)

FAQs

What are the top five ELSS funds 2022? ›

3-year-returns (%) (regular)

Other ELSS mutual fund schemes which gave more than 25 per cent return are HDFC ELSS Tax Saver Fund (26.79%) and Motilal Oswal ELSS Tax Saver Fund (25.21%). At the same time, lowest returns were given by Kotak ELSS Tax Saver Fund (21.11%) and DSP ELSS Tax Saver Fund (21.29%).

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.

Yes it will be advisable to invest more than 2 elss fund for tax deduction and wealth creation but you will be get only tax deduction up to 1.5 lakh only . You can definitely invest in two or more elss funds. Since it's your money it's your choice whether to choose one fund or multiple funds.

You want short-term gains

Chasing quick returns through ELSS funds might not always work, and hence, you should not invest in ELSS funds if you want returns quickly. ELSS funds may be suitable for you only if you have a longer investment horizon.

While there is a mandatory lock-in of three years, you don't have to mandatorily redeem the units once the lock-in period is over. After the end of the lock-in period, the fund becomes a diversified, open-ended equity-oriented scheme. You can redeem the units whenever you want.

Since you can save only up to Rs 1.5 lakh in a year, one scheme is fine,” says P Srinivasan, Founder of Ace Financial Advisories. Many mutual fund advisors second the opinion. They believe that investors should not invest in more than two ELSS funds in a year.

What are the disadvantages of ELSS? ›

After the three-year lock-in period, investors can redeem their investment or stay invested. But the investor must note that the investment after the deductions is still subjected to 10% tax, though ELSS can give high returns in the long term.

Synopsis. Section 80C ELSS mutual fund: Investment in ELSS mutual funds are eligible for tax benefit under Section 80C in the old tax regime. However, for ELSS mutual fund investment to be eligible for tax break for current financial year 2023-24, the investment must be done between April 1, 2023 and March 31, 2024.

ELSS has higher returns potential, but also higher risk and volatility, while PPF has lower returns, but also lower risk and stability. ELSS is taxed at 10% on long-term capital gains exceeding Rs. 1 lakh per year, while PPF is tax-free at all stages.

Investing in ELSS funds in a lump sum can be a mistake. Because ELSS are equity investments, the market conditions at the time of your lump sum investment will have a significant impact on your returns. Instead, consider lowering your overall risk by making smaller investments throughout the fiscal year.

Experts say one or max 2 funds for the purpose of tax saving is enough. Anything more leads to over-diversification. Investing in too many funds can make portfolio management difficult. Over diversifying can lead to lower returns.

ELSS has higher returns potential, but also higher risk and volatility, while PPF has lower returns, but also lower risk and stability. ELSS is taxed at 10% on long-term capital gains exceeding Rs. 1 lakh per year, while PPF is tax-free at all stages.

The ELSS category gave an average return of around 17.63% in a three year horizon. The schemes are benchmarked against NIFTY 500 - TRI, S&P BSE 500 - TRI, and S&P BSE 100 - TRI.