Mutual Funds Alert! Have money to invest? Go for ELSS, say experts

An ELSS mutual fund gives 2.5 to 4 per cent extra returns if the investment is for long-term of around 20-25 years, say experts.

For long-term goals ranging from 20-25 years, one needs to invest in equity funds while in mid-term investment goals, it better to invest in balanced funds. Pixabay

Equity Linked Saving Schemes (ELSS) are fast becoming popular among the mutual fund investors because of the investors in this domain are well aware about the market risk involved while investing. So, the investor is ready to take long-term investment in equity mutual funds as it helps them outperform the market performance by around 2.5 to 4 per cent. As per the mutual fund investment experts, a long-term mutual fund gives around 10.5 to 11 per cent return post-tax payment while in case of ELSS mutual funds the return for the same amount can be to the tune of 13 to 15 per cent post-tax payment. However, experts are of the opinion that though the ELSS mutual funds are becoming popular, people are still not aware as to why and when one should opt for the ELSS mutual funds and achieve one's investment goals.

Speaking on the ways to achieve ones' investment goals Tanveer Alam, Managing Director at Fincart told Zee Business, "To achieve one's investment goals, first and foremost thing that an investor needs to keep in mind is to look at one's goal, not at the return that a mutual fund plan gives." Tanveer said that for long-term investment goals that range from 20-25 years, an investor needs to invest in ELSS funds while in mid-term investment goals, it's better to invest in balanced funds.

Speaking on the higher returns that an investor can achieve by opting ELSS mutual funds for long-term goals Kartik Jhaveri, Director — Wealth Management at Transcent Consultants told Zee Business Online, "ELSS mutual funds give better returns than the market performance. It's fund managers are supposed to outperform the markets and give at least 2.5 per cent to 4 per cent extra returns in the long-term." He said that for long-term investment, ELSS mutual funds would give around 2.5 to 4 per cent extra returns in comparison to customary long-term mutual fund plans. he also advised investors to diversify their portfolio in large-cap, mid-cap and small-cap as they help an investor to minimise his or her loss when the market is not in sync with his or her expectations.

Therefore, if an investor follows the above-given tips by the investment experts and chooses ELSS mutual funds with diversified fund allocation, he or she can expect to achieve his or her investment goals, say, investment experts.

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