Mutual funds, once overlooked due to market risks and lack of fixed returns, saw a shift in demand with the introduction of SIPs. Offering a disciplined approach and consistent returns, SIPs have captured the interest of both seasoned and novice investors. The convenience of online platforms has further fueled the popularity of SIPs, making it accessible to a wider audience.

The reasons behind the increasing demand for SIPs are multifaceted. SIPs promote discipline and consistency in investing, encouraging regular contributions that build wealth over time. Additionally, the concept of rupee cost averaging minimizes market volatility, leading to better long-term returns. The power of compounding further enhances wealth creation through consistent reinvestment of returns.

Moreover, the flexibility and ease of investment associated with SIPs make it an attractive option for investors of all levels. By allowing individuals to start with small amounts and automate contributions, SIPs offer a hassle-free investment experience that doesn’t require constant monitoring.

While SIPs offer numerous benefits, it’s crucial to consider potential risks such as market fluctuations, lack of fixed returns, fees, overexposure, and psychological impact. Understanding these factors can help investors make informed decisions and navigate the complexities of the investment landscape.

The post The Rise of Systematic Investment Plans (SIPs): A Closer Look at India’s Favorite Investment Option appeared first on Vizag One.

These are mutual funds that invest primarily in equity and equity-related instruments, and enjoy tax benefits under Section 80C of the Income Tax Act, 1961. In this background, let us delve deeper into the details of the ELSS scheme.

Benefits of ELSS Scheme:Investments in ELSS under section 80C under the old tax system offer a Rs. 1.5 lakh tax exemption. While this helps save taxes, ELSS has a mandatory lock-in period of 3 years. ELSS funds mainly invest in equities, providing the opportunity for higher returns. However, they also come with high risks due to market volatility.

You can choose between growth and dividend options based on your financial goals. The growth option reinvests profits, while the dividend option provides periodic payments. Long-term capital gains above Rs. 1 lakh are taxable in a financial year.

Investing in ELSS funds can be done through a direct plan or a regular plan. The direct plan involves investing directly through a mutual fund website or app, which typically has lower expense ratios. On the other hand, the regular plan has a higher expense ratio and requires investing through an intermediary like a broker or distributor.

If you invest Rs. 1.5 lakhs, your taxable income under Section 80C would be reduced by the same amount. For those falling under the 30% tax bracket, this could save you around Rs. 46,800 in taxes, including cess. After 3 years, your investment may grow to Rs. 2 lakhs, with Rs. 50,000 taxed at 10% on Long Term Capital Gains.

ELSS presents an excellent investment option for individuals seeking to save taxes while aiming for potential wealth creation. Experts emphasize the importance of understanding the risks and returns associated with these funds. While ELSS offers benefits, it’s crucial to consider the lock-in period and market risks before investing. Consultation with a financial expert is recommended to align ELSS with your financial goals and risk tolerance.

The post Transforming Investor Mindsets: The Rise of Tax-saving Mutual Funds in India appeared first on Vizag One.