Among Section 80C tax saving investments, Tax Savings Mutual Funds (ELSS) offer the benefits of Equity Returns. Unlike ULIPS, tax saving mutual funds are a transparent investment. In contrast to the NPS, which has only partial exposure to equity and a lock in until retirement, ELSS can offer 100% equity in just a 3-year lock in period.
It is a very bad idea to wait until late in the financial year to make a tax saving invetsment. Many people make hasty poor choices. And most importantly, they prioritise tax saving over growing their wealth. In the long run, unplanned ad hoc investments deliver lower returns.
How much you can invest in ELSS will depend on which of the following are applicable:
- Monthly Rent
- House Rent Allowance (HRA in your salary slip)
- Home Loan and EMI amounts
- Monthly Employee Provident Fund (EPF in your salary slip)
- Annual Life Insurance Premium
- Annual Public Provident Fund (PPF)
- Current ELSS investments
- National Savings Certificate (NSC)
- 5 year Bank FDs started this year
- Tuition Fees you pay