Here, we will discuss the checks one needs to do before buying ELSS
We discuss 4 key things you need to check before Equity Linked Savings Scheme
This is needed to ensure that you maximise the long-term high growth of ELSS
First, is that ELSS is a higher risk mutual fund and there is a 3-year lock-in
Third, is that you need to stay away from the lure of dividends with ELSS
Fourth, you need to avoid buying too many ELSS since it is counterproductive
These four things are also the common mistakes which investors make
They prevent investors from getting the most out of ELSS
You need to keep in mind that ELSS is a higher risk tax-saving investment
Remember, most of the other tax-saving investments are lower risk investments
Tax-saving investments such as PPF and NSC are not linked to the equity markets
ELSS investment can be volatile in the short term
In the long term, it typically provides high return
If investing through SIP, in ELSS, each instalment needs long term investment
By knowing about the higher risk and volatility in ELSS, people need not panic
Take a good look at the ELSS before investing as there is a 3-year lock-in
Consider 1-year, 3-year and 5-year performance and its standing
Avoid ELSS dividends. You want long term high growth with tax saving
With dividends money comes back to you when it should have stayed invested
By ELSS for growth with growth option
Earmarking ELSS for long term goal helps you make the most of it
Avoid too many ELSS
Every successful ELSS will not outperform every year
Remember, 90% of long term returns is determined by the presence in an asset class
So, don't have too many ELSS investments