Tax saving is one of the most important investment objectives of many investors. In another 10 days the current Financial Year ends and the new one begins. So, when is the right time to start planning your taxes? Is it good to wait till next IT declaration season or March for tax planning?
You may kick-start your tax planning from this April itself. Don’t wait till March 2018!
And, which is the best available investment option for tax saving cum long-term wealth accumulation in Equity products?
I believe that ELSS (Equity Linked Savings Scheme) is one of the best tax saving options that we currently have in the financial market.
Why ELSS Funds?
- ELSS Tax saving mutual funds come with a lock-in period of three years; the lowest among all the tax saving options that are available under Section 80C. (PPF’s lock-in period is 15 years, Tax saving Bank Fixed Deposit’s is 5 years, National Saving Certificate’s is 5 years etc.,)
- ELSS falls under EEE tax rule(Exempt-Exempt-Exempt). No taxes are applicable during Contribution-Accumulation-Withdrawal phases. The Employee Provident Fund and the Public Provident Fund are the only other investment options that enjoy the EEE tax treatment. (Read : ‘Tax Treatment of various Financial Investments‘)
- There is no upper limit for investment in ELSS but the maximum tax benefit is limited to Rs 1.5 lakh under Section 80C.
- Investing in ELSS funds can give you a better chance to get better inflation adjusted returns (of course higher returns may generally associate with higher risk profile).
Top 5 Best ELSS Funds to invest in FY 2017-18
There are around 111 ELSS Mutual Fund Schemes and the average category returns for the last 5 years is around 12%. Below are the top performing Tax saving mutual funds and their lump sum investment Returns; (Returns are for Regular plans and Growth option)
- DSP Blackrock Tax Saver Fund
- Birla Sunlife Tax Plan
- Birla Sun life Tax Relief ’96
- Franklin India Taxshield Fund
- Axis Long Term Equity Fund
Below are the best ELSS Funds and their monthly SIP Returns ;
Best ELSS Mutual Fund Schemes & Risk Statistics
Above data gives us information mainly on past Returns that were generated by these top performing ELSS mutual funds. Besides investment returns, it is equally important that we need to look at the Risk Stats of these Funds.
The volatility of returns generated by a mutual fund scheme can be measured by some important risk ratios like;
- Standard Deviation
- Beta
- Alpha
- Sharpe Ratio
- R-Squared Ratio
- Upside & Downside Ratios
Below info-graph gives us an idea about ideal ratio/percentage that can be considered while selecting a mutual fund scheme;
I have shortlisted the above listed best ELSS Funds based on these measures of volatility;
(Source : Valueresearchonline.com)
Best ELSS Funds & Analysis :
- DSP Blackrock Tax Saver Fund : This fund has invested its corpus primarily in stocks that belong to Banking, Oil & Gas and Auto sectors. Almost 70% of the fund’s corpus has been invested in Large cap stocks and around 20% in Mid-cap Company Stocks. The returns generated by this fund during last 5 year and 10 year period are 20.6% and 15.6% respectively.
- Birla Sunlife Tax Plan : The top sectors chosen by this ELSS fund are Auto, Banking and Pharmaceuticals. You can consider this fund as a typical Mid-cap oriented fund, as around 57% of its fund corpus has been allocated to mid & small cap stocks. The returns generated by this fund during last 5 and 10 years are 19% and 12% respectively.
- Birla Sun life Tax Relief ’96 : The fund’s portfolio has stocks from these top 3 sectors – Banking, Auto & Pharmaceuticals. The portfolio has higher allocation (around 57%) to Mid & Small cap stocks. This fund generally follows multi-cap strategy. The returns generated by this fund during last 5 & 10 years are 20.1% and 12.6% respectively.
- Franklin India Taxshield Fund : Banking, Auto and Technology sectors have been given importance by this fund in its portfolio allocation. Based on its portfolio allocation, we can consider this fund as a typical Large cap oriented fund. Around 80% of the fund corpus is in Large Cap Stocks. This fund has been one of the most consistent ELSS funds for the last many years.
- Axis Long Term Equity Fund : The fund’s performance has not been up to the mark in this Financial year (2016-17). But, may be it is too early to drop this fund from the top ELSS Funds list. Let’s give it some more time…! The fund is still one of the best consistent performers during the last 5 year period. Banking, Auto and Engineering are the top 3 sectors in this Fund’s portfolio.
You may also track / consider Tata Tax Savings Fund and ICICI Long Term Equity Fund.
FAQs on ELSS Funds
- My Section 80C bucket is full, should I still invest in an ELSS Fund? – You may consider investing in other mutual fund categories based on your investment objectives and time-frame. (Read : ‘Best Equity Mutual Fund Schemes – 2017‘)
- What is the best way to invest in ELSS – Lump sum or SIP mode? – There is no right or wrong answer. For the sake of convenience, I prefer 2 to 4 lump sum installments in a FY instead of monthly SIPs. Let’s understand the fact that timing the market is next to impossible. If you do not have the time to track the markets, it is perfectly ok to create a SIP in an ELSS fund. But, do note that units allotted under each SIP are locked for 3 years. (Read : SIP Vs Lump sum investment!)
- Dividend or Growth option, which is better for ELSS investment? – It is advisable to make investments in ELSS Schemes for long-term goals, so Growth option is better than dividend for long-term wealth accumulation.
- Are ELSS funds also Multi-cap funds? – We need to look at Funds’ Portfolio allocations to consider them as Large cap or mid-cap or multi-cap oriented funds. As mentioned in the above analysis, funds like DSP Tax saver / Franklin Tax Saver have high portfolio allocations to Large Cap Stocks. (Do note that Portfolio allocations can change over a period of time depending on the market cycles / Fund’s investment strategy.)
- Should I invest in Multiple ELSS Funds? – If you have already made investments in an ELSS fund, you may continue making additional investments in the same fund. But, do track its performance at least once in a year.
Kindly note that ‘Tax saving’ is just one aspect of ELSS investments. Wealth creation should also be an equally important objective. The key to equity investment is to remain invested for a sufficiently long time horizon of at least 5-7 years.
Continue reading : ‘Best ELSS Tax Saving MF Schemes for FY 2018 – 2019.’
(Featured Image courtesy of Stuart Miles at FreeDigitalPhotos.net) (References : moneycontrol.com, valueresearchonline.com, freefincal.com, morningstar.in) (Post first published on : 21-March-2017)
(Kindly note that Mutual Funds are subject to market risks and past performance may or may not be repeated.)
Top 5 Best ELSS Mutual Fund Schemes for Tax saving & Wealth Creation
How to set-off Capital Losses on Mutual Funds, Stocks, Property, Gold, Bonds & Debentures?
Hi Sreekanth,
As market is going down everyday so is it good time to invest in mutual funds?
Regards
Saurabh
Dear Saurabh,
Ideal strategy is to buy at low and sell at high.
So, if markets are giving opportunities like these (may be markets may correct a lit more), let’s use them to invest more.
Personally, I am making additional investments now. Will invest more in Feb/Mar if markets correct more.
Really informative article
I have an SIP of 10000 per month in Franklin India Tax Shield Fund (Direct-Growth).
Recently when i check my SIP transaction history i could see that i’m buying mostly when the markets are high for that month.
I want ideally to buy when the markets are low, so i was thinking why could i not invest 10000 everymonth regulary as lumpsum so that i
would have more control on my purchase.
Are there any difference or disadvantage for this method?
Or is there any kind of SIP method where we can modify the SIP date every month.
Would like to know your opinion.
Dear Vishnu,
There is no perfect right or wrong strategy.
Personally, I follow ‘invest at lows’ strategy, especially for my ELSS investments.
But do note that the day when I invest in a month may not actually be the lowest point for markets in that month. That’s fine! We cant TIME the markets.
But one needs to have time and interest to follow the markets and make investment decisions. In case, you do not follow the markets, its absolutely fine to invest in SIP mode, for longer term.
Kindly read : SIP Vs lump sum investment
I am short of about 60K to reach 150K for Sec 80C deduction. I am planning invest in ELSS MF. Can you please suggest whether I should go for a lump sum investment this month or break it out into 4 SIP? Also please suggest the one fund from your list. I have a long term plan of at least 10 years and can go for 20 years as well. Thanks in advance.
Dear Rabi,
Lump sum or SIP, no right or wrong strategy.
May be you can consider Birla Tax relief 96 fund.
please suggest me 2 diversified elss fund (50:50) to invest now in december 2017 for 15-20 years horizon for retirement
Dear Binod..You may pick any two from the above list in the article.
Dear Sir,
I am a freelance translator.
My income is not stable.
Now I have around 1 lakh fund to invest for tax saving option.
I searched the net and found ELSS is the best option.
I am new and know nothing about it.
could you please guide me?
Dear Binod..Ok sure..may I know your exact query?
Related article : List of tax exemptions for Financial Year 2017-18
Dear Sir,
I have some fund right now around 1 lac
which I want to invest in ELSS fund for tax saving as well as invest for long term 10-20 yrs (for retirement or child high education)
so please advise me where to invest them and how much
Dear Binod,
You may invest the amount in 1 or 2 ELSS funds.
Ex : Franklin Tax shield / Birla Tax relief ’96 etc.,
Kindly read :
Retirement planning calculator
Kid’s education goal planning
should i invest all in one fund?
or should I invest in different fund for diversification?
what about other fund like axis long term tax fund, idbi tax fund, reliance tax saving fund, dsb black rock tax saving fund?
I am little confused because whenever I open a new site there is something different suggestion has been given. some recommend dsp black rock for examle in quora, there is different opionon and suggestion has been given in different sites like value search, etc.
Dear Binod,
Investing in too many funds that too from same fund category may not be really beneficial.
As your investment objectives are tax saving and long term accumulation, you may consider picking 1 or 2 ELSS funds.
The above suggested funds are consistent performers for last many years.
Kindly note that returns from mutual funds are not guaranteed and past performance may or may not be repeated.
Kindly read : MF portfolios overlap analysis tools..
ok but whether should i invest all my money in only one fund?
or should i invest in other fund too?
should i consider in investing ppf also?
should i invest in fanklin and birla in 50:50 ratio?
i shall be obliged for your help
Dear Binod,
If you would like to add some safety to your overall investment portfolio then do consider contributing to PPF.
You may invest say Rs 70k in two ELSS funds and Rs 30k in PPF.
thank you very much for your continuous support and suggestion.
Dear Sir,
one more help needed!
could you please tell me how can I put my nominee name while investing in elss fund.
and what is this joint holder.
what is the different between second holder and nominee.
which one is best – second holder or nominee.
is it have any effect on taxation?
I mean to say if I add my wife name as second holder/investor then what will happen?
or if I add my wife name in nominee what will happen?
what is the different – advantage and disadvantage?
Dear Binod,
Joint holder is nothing but joint ownership.
Nominee is the person who receives the money in case the primary holder or joint holders die.
Kindly read :
Nominee Vs legal heirs
Is Lock-in period for Investments applicable on unfortunate demise of the Investor?
Hi Could you please suggest me the best tax saving ELSS to invest for short term with a small amount?
Dear Chinnu..Could you define what is ‘short-term’??
In case, your investment time-frame is less than 5 years, suggest you not to consider investing in ELSS/Equity oriented Schemes.
Related articles:
Tax treatment of various financial investments
List of best investment options
Thanks for the info. Could you please suggest which is the best tax saving scheme if I invest Rs.2000 to 3000 per month for 3 to 5years span.
Thanks
Dear Chinnu..You may consider Franklin Taxshield fund.
Hi,
As you mentioned – ” I prefer 2 to 4 lump sum installments in a FY instead of monthly SIPs …. each SIP are locked for 3 years… ”
For a 60 years old person – to get the Tax benefit – how can I invest Rs 1L in Oct 2017 to Match 2018
Should I break the money in three or four parts and invest one part in each remaining month ?
Thank you
Bubai
Dear Bubai .. Suggest you to invest one part over the next 6 months. (This is as good as monthly SIP, the units allocated under each SIP gets locked for 3 years, I have suggested so by keeping your age in mind and the current equity market status).
Hey Sreekanth ,
Why Tata Tax saver fund is not in your recommendations.
It has 5 star both by Value research and Crisil.
Any specific reason to not select that ?
Dear Bharat,
Kindly note that these star ratings are given based on recent performances.
It is a decent performer, hence mentioned about it in the article as well.
Hi, I am beginner to mutual funds and I am looking to invest around 30 k per per month. I would like to start from this month. Please suggest good mutual funds ….in all categories…
Dear ASHISH,
Kindly read :
How to pick right mutual fund schemes?
Best Equity funds list
MF portfolio overlap analysis tools
Hi
I am planning to invest 10k per month in mutual funds and though of below. i am doing this for tax saving. i can wait till 5 years for withdrawl
1) Axis Long term – 5K
2) Reliance tax saver fund – 3K
3) DSP black rock – 2K
Whats your suggestion
Dear Gaurav,
You may pick 1 & 3 as they are bit less risky considered to reliance fund. (based on past performance..)
Kindly read : MF portfolio overlap analysis…
Out of Birla Sunlife Tax Relief 96 and DSP Blackrock Tax Saver, which ELSS scheme should I go for if I already have Franklin India Taxshield?
Dear Mamta..May I know your investment time-frame??
To be honest I don’t have a time frame/goal in mind. Once the 3 year lock in period is over i will withdraw the money depending on when I need it.
Currently I am just looking to diversify my portfolio and don’t want to put all my money in one ELSS.
Dear Mamta.. If you can afford to take risk you may opt for Birla tax relife 96 fund as it has slightly higher allocation to Mid-cap fund, else you may pick DSP tax saver fund.
Kindly read : How to pick right mutual fund schemes?
Thanks Sreekanth.
Hi, I am beginner to mutual funds and I am looking good tax saving funds for long team goals say 10 to 15 years. And I would like to invest 10k per month trough SIP. I would like to start from this month. Please suggest good mutual funds.
Dear Jayaram ..Kindly refer to the above list.
Suggested reading : How to select right mutual fund schemes?
I am investing 7000/month in ICICI Purdential Long Term Equity Fund (ELSS), since 1 year, But now When I compare the performance with other ELSS funds, I found the the scheme in which I am investing is giving me very less growth… should I continue with this fund or to change with some other scheme?
Dear Smit..Yes, the fund’s performance has not been upto the mark..
May I know your investment time-frame?? Do you hold any other funds in your portfolio?
Is this investment for tax-saving cum wealth creating?
Hello Sreekanth,
I have similar query on ICICI Pru LTE. I have been investing 4000/pm in ICICI and Axis LTE for my ELSS investments since last 16 months. I do have other large, multi and midcap funds in my portfolio. Though my horizon is long term (8-10+ years) but still I get a feeling that ICICI Pru LTE might need to be replaced by some other ELSS now or may be sometime in future. Please advise.
Dear Tarun,
Yes, it has been consistently giving returns that are lower than its benchmark index and also ELSS category average returns.
As of now, this fund’s corpus allocation is more or less like a multi-cap fund, hence may be Birla Tax relieve 96 can be considered as an alternative.
Valueresearchonline analysis – “The fund’s investment strategy typically delivers outsized returns in the beginning stages of a bull market when sector rotation is in vogue. It trails when markets are overheated.”
Thanks much for your response Sreekanth. I was thinking of switching to one of these three- DSP Black rock tax saver, Birla tax relieve 96 and Reliance Tax saver.
Since I am ok to be little aggressive, omitted DSP tax saver from list. But now I’m little confused between Birla and Reliance ones..Reliance tax saver has provided good returns in past but I’m not sure why this fund is not in your suggested list, also value research has rated it as 3 star only, whereas Birla Tax relieve is a 5 star fund. Any inputs on Reliance Tax saver?
Dear Tarun ..Reliance has higher standard deviation…given a choice, I would invest in Birla fund (just a suggestion!).
Yeah I got the same feeling. It has much higher risk for little or no extra return and there is no point chasing for little higher return making my equity portfolio vulnerable. 🙂
Thanks much again as always !
Hi Sreekanth
Last year i had invested about 10K lumpsum in Franklin India Taxshield Fund.This year also i’m planning to invest in some ELSS. I may need to invest around 13000 by the end of this FY in ELSS inorder to fully utilize the 80c section(as i dont think i can utilize any other option better).
So should i continue with Franklin India Taxshield Fund or any other fund which may offers better returns in the longterm?
I may invest in an SIP of 5000 or 10000 permonth ,then 1 or 2 lumpsum if i feel the markets are down.
Dear Vishnu,
You may consider same ELSS fund.
Kindly read :
Best Equity funds
Lump sum Vs SIP
What is 200 day moving average?
How to pick right mutual fund scheme?
Thanks for the response Sree
Recently when infosys ceo resigned there was around 10% loss in infosys shares.
When i checked Franklin India Tax Shield top holdings, infosys is present.
If infosys shares continues to drop is it a good idea to invest now in FI-TS fund.
Dear Vishnu ..If you are investing in mutual funds (for long term), suggest you to kindly do not react to these kind of events..keep continuing with your investments!
What bout the Mirare ELSS ??
Hi Sreekanth,
Needed your help. After going through this article, i finalized Birla Sunlife tax plan 96 for this year ELSS investment. Now under the confusion whether to buy Regular or Direct Plan? shall i go for Growth or Dividend option? This is the first time i am opting for ELSS. Kindly suggest other precautions if any, to be taken before going for it.
regards
RAJ
Also request you to suggest timing, means shall i go for purchase right now , when the market is high or shall i wait till market gets some corrections?
Dear Raj,
It is a consistent performer.
You may opt for Growth option and Direct plan.
Is this lump sum investment or are you setting up an SIP? If you are starting a fresh SIP, you may do it now and let’s not try to TIME the markets.
Hi Sreekanth
Thanks for your kind reply. I am planning 50 K lumpsum for this year only.
regards
RAJ
Dear Raj,
If you can wait for some time, you may invest this amount in 2-3 installments over the next few months.
Hi Sir,
Any specific reason to wait and invest 2-3 installments?
Regards,
-Parimal N
Dear Parimal,
As it is a lump sum investment, markets are at 52 weeks high, may give a good opportunity to invest at slightly lower levels..
Hi Sreekanth,
My dad invests Rs16K monthly in his G.P. fund (Under section 80C). I wanted to check with you is it advisable to invest 10K monthly in ELSS mutual fund? I wanna make sure that we still get all the tax savings. He will be retiring in around 6 years.
Dear vishal,
Kindly select a product if it meets your investment objective and risk profile. Tax saving is only an added benefit.
Kindly read :
Think beyond taxes when investing!
List of best investment options!
List of important tax exemptions
Hello Sreekanth,
Your analysis really helpful,
Please help me out,
I have just started investing ELSS for tax saving, recently invested 3k in ICIC PRU Tax saving scheme,
I would like to invest another 4kpm. Please let me know 2 ELSS scheme where I can invest 2kpm.
I planning to invest minimum 5 years in these ELSS funds.
Dear Karthickram..You may consider Franklin Tax shield fund.
Try to remain invested for longer period.
Hello Sreekanth,
Your analysis really helpful,
Please help me out,
I have just started
Dear Karthickram .. May I know your query??
Hi Shreekanth,
Sharing you my portfolio.
Kindly Consider for advice.
I am investing in PPF-2000/M
AXIS LTE GROWTH DIRECT-3000/M
HDFC MID-CAP OPPERTUNITY-4000/M
ABOUT TO START IN LARGE CAP IN FOLLOWING.
SBI BLUE CHIP-2000/M
MIRAE ASSET INDIA OPPORTUNITY FUND-2000/M
BIRLA SL FRONTLINE EQUITY-2000/M
and thing to put in balanced fund for 4000/M FOR MAINTAINING DEBT:EQUITY RATIO.
and SMALL CAP AND MULTI CAP-1000/M EACH
I have a lump-sum of 40k and i want to invest in ELSS for tax saving and wealth creation.should I go for axis which is under performing now or Birla Sun Life Tax Plan-G/DSP BlackRock Tax Saver Fund-G .
The above portfolio is for long term wealth accumulation(retirement,child education and marriage) and time period is above 10-15 years.
Kindly suggest me if i am doing wrong in any segment.
Please advice if fund selection is wrong.
Dear Deepak,
The listed funds are good ones.
However you may check the portfolio overlap of the three large cap funds and short list one.
Kindly read :
How to pick right mutual fund scheme?
MF portfolio overlap analysis tools
Best ELSS Funds
Best Balanced funds
Thanks Sreekanth for replying..
SBI and MIRAE having fund overlap of 45%
So I am thinking to make in Mirae and birla sunlife in case of large cap.
sir i want to invest 6k to 7k PM for 3 years in mutual funds for 80C tax exemption. My risk capacity is minimum. pls suggest suitable plan. my age is 35 and sal 56k.
Dear MURTHY ..If your investment time-frame is around 3 years and can not afford to take risk then you may kindly avoid investing in ELSS tax saving mutual funds.
Kindly read :
Options under Section 80c.
Best investment options
List of income tax exemptions
Nicely summarized. well done. keep it going.
Hi Shreekanth,
You are doing a great job.
Currently I have invested in 2 SIP Rs 5000 each
1. Birla Sunlife 95 balanced fund (Since December 2016)
2.ICICI Prudential balanced fund (Started from December 2016)
Now I am planning to start 2 more SIPs
1. Reliance Equity (Pharma) as Pharma sector is very low
2. DSP black Rock balanced fund
Planning to invest rs 5000 in each fund
Please suggest
Dear Richa,
May I know your investment time-frame?
Kindly read : MF portfolio overlap analysis tools
Hi Sreekanth,
Time frame is 5-10 years
Dear Richa,
You may add one Diversified Equity fund & one Large cap fund.
Kindly read :
Best Equity funds
How to pick right mutual fund scheme?
you may add One of fund from
Reliance Top 200
HDFC Mid Cap
Sbi Blue Chip
And
ICICI Value Discovery fund
Dear Sreekanth,
I am planning to invest 2.5laks amount.below is my plan
1.)NSC-1,00,000/-
2.)Hdfc balancedfund directregulargrowth-60,000/- (lumpsum) for 5years
3.)icicivaluediscovery fund directregulargrowth- 60,000/-(lumpsum) for 5years
5.)Franklin smallercompanies fund directregulargrowth – 3000/-(SIP)
already have axis LTE -contributing 2500/-
Is my plan leads to correct direction ?
or will it be good to book a flat by taking 20lakhs home loan
My age is 26years so i don’t have any family burden .
Kindly suggest which ll be good plan for me.
Dear sudhir,
Suggest you to go ahead with your investment plan. May be it is wiser to invest as much as you can in equity oriented schemes instead of taking a home loan (if it is not a priority).
Hello Srikanth,
Thank you for the very informative article on ELSS funds, its very helpful for people like me who are just starting to invest in mutual funds. I have started investing in MF about three months back and I do research on my own and do invest based on my conclusions. Could you please review my portfolio please, I am looking at long term investment (maybe for more than 10 years).
Axis Long Term Equity fund – 25000 lump-sum and 3000 SIP
DSP BR Tax saver fund – 25000 lump-sum and 3000 SIP
Birla SL Tax relief 96 fund – 25000 lump-sum and 3000 SIP
Kotal Select Focus fund – 10000 lump-sum and 2000 SIP
Franklin India smaller companies fund – 20000 lump-sum and 3000 SIP
Mirae Asset Emerging blue chip fund – 2000 SIP
DSP BR Natural Resource and NE fund – 1000 SIP
I am thinking to add SBI Blue chip with 3000 per month SIP.
Please let me know if I need to re shuffle/add funds to my portfolio. I am 30 years old and willing to have moderately aggressive portfolio as I have more than 20 years of time.
Thank you
Dear Srinivas,
You have 3 ELSS funds which can also be treated as multi-cap/diversified and also have one more multi-cap ie Kotak select focus fund.
You may try trimming down the number of funds, kindly check – portfolio overlap of these funds.
Franklin & Mirae funds are good ones.
I am investing in SIP in Reliance Vision Fund for the last 06 years. However, of late, the fund seems to be under performing with respect to other similar funds. Do I continue to invest in the Vision Fund or do I try to shift to some other mutual fund. Your recommendations for the second option?
Dear Sivakumar ..You may switch to other large cap funds like Birla Frontline / SBI bluechip etc.,
Currently I am investing in Birla Sun Life Frontline Equity Fund ( Rs. 3000 monthly) and in PPF ( Rs. 8000 monthly)
My objective is to accumulate enough fund ( min. 3 cr) for my post retirement life. My age is 28 yrs old.
Will investing in NPS be a good choice?
If not, can you please suggest me other fund to invest to meet my objective. I can invest another Rs. 5000 per month.
Dear Anurag ,
Kindly go through below articles, you may use the available calculator and revert to me with your analysis;
Retirement planing made easy!
Is NPS a good investment option?
How to pick right mutual fund schemes?
Best Equity funds to invest!
How good is the Reliance Tax Saver Fund? I have seen this fund as best buy funds in other websites. Please suggest
Dear Saket ..I believe that its a high risk high return kind of fund. Standard deviation can be very high (volatility of returns can be high).
I have invested a lumpsum of 10000 in Franklin India Taxshield on Jan 2017 for tax saving purpose.
Since i was a little late to invest for the FY 16-17,this FY im planning to invest early.
But now since the markets are high i’m not investing lumpsum.
My question is should i invest in SIP now or should i wait for the market to go down to invest lumpsum?Which is better if i can time my investment correctly when the market goes down?
Dear Vishnu ..It is next to impossible to time the markets.
You may set up SIP for the fund (if ok with SIP mode) and invest 2 to 4 lump sum installments when you believe that markets are down.
The point here is ‘dont wait’…
Hi,
I am 32 years old, service class person. I have never invested in MF before. Now I want to start monthly SIP with 5000/- for next 10 years.
Can you please help to create my SIP portfolio.
Another question is should I invest in MF through broker/agents or Can I book MF online by myself from ICICIpru, HDFC, Birla sunlife, others websites ?
I want to book MF online only but as I am a first time investor in MF, I am worried if it would it be a tedious task for me to maintain my portfolio without agent.
Dear Rajat,
You may take help of a trusted Advisor to create an investment portfolio for you.
If you are comfortable picking few good MFs on your own then you may consider investing in Direct plans through MF industry funded online platform called MF Utility. You can invest in all types of schemes through this platform.
Read:
Best Equity funds.
How to pick right mutual fund scheme?
What are Direct plans of MF Schemes?
Direct plans Vs Regular plans
MF Utility online platform.
Hi,
I wish to start investment in mutual fund. I can invest 60000 a month.
Portfolio is,
Kotak Select Focus-10000
L&T Midcap-10000
DSP blackrock microcap-10000
SBI Bluechip-5000
Franklin India Bluechip-5000
Birla Sun Life Advantage Fund-5000
L&T Infrastructure-5000
UTI Dynamic Fund-5000
Canara Robeco Gilt PGS-5000
In long Horizon, how will it perform?
Suggestion please.
Dear Manjunathan,
No one can predict the future.
Suggested readings;
Best Equity funds.
How to pick right mutual scheme?
MF portfolio overlap analysis tools.
Dear Sir
With my growing financial literacy, I want to invest about 120000 Rupees per year in ELSS and PPF at 60:40 ratio. It means about 72000 will be invested in ELSS annually. The part of PPF will be increased with the time and of ELSS will be decreased.
For a goal of 12 years ahead, I need to invest money in ELSS till 9 years as 3 years will be the lock-in period. Moreover, the money may need to be redeemed one year before to transfer in fixed deposit instrument.
Whether I should invest whole 72000/- in one ELSS fund only; if yes please suggest fund, out of 5 funds suggested above, for this time horizon.
Regards
Dear Maninder,
Franklin Tax shield is one the best consistently performing funds. But returns can be more conservative and not abnormal returns.
If you would like to take a bit aggressive call, you may consider either of Birla funds.
Dear Srikanth Garu,
This post helps me to understand basics of ELSS funds. This is the first time I am planning to invest in ELSS funds. I am ready to take some risk on my investment. I am planning to go with 5 years time line. Kindly suggest should I go with direct AMC or Can I with third party advisors?
Dear Saichand ..You may go ahead with DIRECT investment.
Read:
What are Direct plans of MFs?
Direct Plans Vs Regular plans – Returns
MF Utility online platform..
Hi Srikanth,
Very nice article!!!
Presently I have one home loan with IDBI bank details as below:
Outstanding Amount : 14,00,000
Tenure Remaining : 7 Yrs and 5 Months
Intt rate : 9.5%
PFB total provision amount for Year 2017-2018
Total Interest Rs. 1,27,531
Principal Rs. 1,36,790
I want to repay my home loan ASAP e.g 3 yrs, So whether I go to repay my home loan (1 lacks to 2 lacks repayment p.a.) or invest in MF for 3 yrs.
My tax bucket is full with 80C.
I have TERM PLAN of LIC and health insurance cover for self/family.
Thanks
Vikram
Dear Vikram,
May I know your other financial goals?
Have you planned or saving adequately for your other goals?
Hi Sreekant,
Thanks for reply.
I have sukanya samriddhi yojana for my daughter and saving is sufficient for other goals.
Now i am confused whether i repay loan amt paritiallly or invest in some other products.
Please let me know any product which given me good return in 3 yrs.
Thanks
Vikram
Dear Vikram,
Kindly go through below article and you may revert to me with your analysis :
Kid’s education goal planning..
Retirement goal planning..
For a 3 year term, you may consider a MIP Fund ..
Hi Srikanth,
Very nice read! thanks for the valuable information!
I need your help as i intend to start investing in MF this year. Main intention is tax saving and building up capital.
Presently i have 2 RDs of 10000 and 5000 each. this is for my short term Goal(1 year).
Apart from this i pay monthly Rs. 2000 towards insurance and 2000 in PPF.
I have saving budget of 10000 per month apart from above investments. i have shortlisted below ELSS schemes. Please suggest if these are ok and also few options for another Rs. 4000 investment per month
Birla SL Tax Relief 96 (G)- Rs. 3000
DSP Blackrock Tax Saver Fund – Rs. 3000
Thanks and Regards,
Reema
Dear Reema,
May I know your insurance (life) policy details : Plan name, commencement date and tenure??
Both are good ones. Would like to invest the remaining Rs 4k in ELSS funds only??
hi Shreekanth,
Insurance is Jeevan anand started in 2011 and it is for 15 years.
Remaining 4 k can be any investment in MF for capital gains.
Regards,
Reema
Dear Reema,
Kindly go through below articles :
Traditional life insurance plan – a terrible investment option?
If Life is unpredictable, insurance cant be optional!
Best online term insurance plans.
Term insurance + PPF Vs traditional life insurance plan.
If you are investing for long term say 10+ years or so, you may pick Mid/Small cap funds.
Read : Best Equity funds.
Hi Sreekanth Garu,
I have an ULIP with Birla sunlife(Birla sunlife foresight plan) – 5 year plan(completed). I wish to with draw this for down payment of new House planned for 2022. I have LIC Jeevan Anand policy for 5 lakhs – premium of 26434/YR.
I can invest up to 15000/Month.
I plan to start investing in an SIP/ELSS. Here are my goals
1) Pay EMI of 40,000 monthly for housing loan
2) Child education (2 year old)
How much amount should I invest monthly to achieve my goals. should I increase my investment amount?
Thanks in advance
Dear Nagavardhan,
Do you mean to say that you would like to invest money to fund monthly EMIs?
Have you planned or saving adequately for retirement goal & kid’s education goal.
May I know if you have adequate life cover?
Suggest you to go through below articles, and you may revert to me with more queries;
https://www.relakhs.com/insurance-importance-life-health-accident-covers/
https://www.relakhs.com/financial-planning-pyramid-wealth-protection-accumulation-distribution/
https://www.relakhs.com/retirement-planning-calculator-3-easy-steps/
https://www.relakhs.com/calculate-kids-education-goal-amount/
Hi Srikanth
What is your opinion on Mirae Asset tax saver fund?
This fund launched last year, but the holdings and the fund manager are very similar to the “Mirae emerging blue chip fund”
Let’s say if the time horizon for this fund is more than 10 years, do you think it’s a good option?
Thanks
Bharghav
Dear Bharghav,
Advisable to consider the funds with long track record.
This does not mean that this fund is bad / good…why to take bit more / extra risk.
dear sir
my LIC yearly premium Rs.43000/- please suggest me SIP directly paid my premium .
regards
deepak
Dear deepak ..I am unable to understand your query..kindly rephrase it plz..
Thank you for this informative post on ELSS Schemes. They are better investments as compared to other tax saving investments.
Good information sir
Dear Sreekanth,
I have been investing into mutual fund from past 10 years with help of a broker and now I started investing myself. I’m investing rs. 40,000 and my portfolio has following funds. Please suggest 2 things.
1). Is my portfolio looking good.
2). Recently I redeemed around 2.15 lac because fund was performing low from past 2 years. What is the best time to do a lumpsum investment or should I try any other method so that I dont loose on gains. I’m waiting for market to go down!
DSP BlackRock Micro Cap Fund 5000
DSP Tax Saver 5000
Reliance Tax Saver 2500
Reliance small cap 5000
Kotak select focus fund 4000
L&T india value Fund 4000
ICICI Pru discovery 3000
Mirae Asset Emerging Bluechip Fund 3000
SBI Blue Chip Fund 4000
Franklin India Smaller Companies 2000
Birla Sun Life Equity 2500
Dear Naresh,
All most all the above listed funds are good ones.
But you may try to trim down your portfolio a bit.
Read:
MF portfolio overlap analysis tools.
How to pick right mutual fund scheme?
MF fund categories..
Best Equity funds.
If you do not want to invest lump sum amount, you may set up a STP (Systematic transfer plan) from a Liquid fund to any of your existing equity funds.
Kindly note that STPs are treated as normal redemption, so capital gains (if any) are taxable.
Read: MF taxation rules.
Hi sir, I am planning to invest through SIP and this would be my first investment in any type of MF. I would like to start SIP investment firstly for Tax saving purpose, so pls suggest me some best tax saver finds. Thanks
Dear Nilesh,
You may consider Franklin Taxshield fund and do remain invested for longer period.
thanks sir for your valuable reply.
Hi Srikanth,
I am new to mutual fund investment. I am planning to invest around Rs. 40,000 per/month thru SIP in multiple mutual fund company. From Rs 40,000 I want to invest Rs. 5000 per/month in five SIP for ELSS funds and rest 35,000 Rs per /month in other funds. Please help me to select best funds to start my SIP. Many thanks in advance.
Thanks,
Rahul
Dear Rahul,
Do you mean to say that you would like to pick 5 ELSS funds?
May I know your investment time-frame?
Read:
Best equity funds.
How to pick right mutual fund scheme?
Hi Sreekanth,
Thanks for your reply. I would like to pick other funds as well as 5 ELSS funds. I want to invest 40,000 monthly SIP in multiple funds. These includes 5 ELSS, some long terms(10 to 10 15 years), some medium terms(3 to 6 years) and some short terms(1 to 3 years). Please help to pick the right funds and amount allocation in each fund.
And also is it good idea to invest Rs. 5000 per month in 5 ELSS SIP(1000 rs for each fund monthly)?
Many thanks in advance and appreciate your heartiest help.
Thanks,
Rahul
Dear Srikanth,
I am investing in Mutual Fund through SIP route from last two years.Request to kindly review my portfolio and suggest for any modifications,
SBI BlueChip Fund-Reg(G) – Rs.1000
Tata Balanced Fund(G) – Rs.1000
HDFC Balanced Fund(G) – Rs.1000
Franklin India Prima Plus Fund(G) – Rs.1000
Mirae Asset Emerging Bluechip-Reg(G) – Rs.1000
Thanks a lot…
Dear sridharan ..You may continue with your investments for long-term.
Hi Sreekanth,
1. I have accumulated some money in my account, is it a good idea to invest for 2017-18 now or should I do it next year at the last moment. I have people recommending me to do near the FY close as ELSS has a lockin period but I want to set aside the investment now, I am really confused?
2. I already have two ELSS, my question is should we take out the money after 3 years lock in is over and invest that money in fresh accounts or let it.
3. I have 3 SIPs in ICICI pru discovery, Franklin smaller co & DSPBR micro cap. For ELSS I am thinking about DSPBR tax saving. Do you advise different? Are my non-ELSS funda ok?
Thanks
Nancy
Dear Nancy,
1 – You may start investing from now itself, if your investments are for long-term.
2 – If you do not required this money, you may keep holding on to your investments.
3 – You have picked two small cap funds, and hope you are aware of the higher risks associated with small cap funds. Portfolio looks fine. You may consider DSP tax saver fund.
Hi Srikanth
I am Naveen Kumar, we are a working couple with a 2.5 year old kid, currently working in Singapore. I am 30 where as my wife is 33. We earn about 12000 PM and save about 5000$ per month. We already bought a flat in Hyderabad which cost us 1 cr- 1899 sft including all costs luckily we were able to pay the amount without any loan since the property was under construction. To be honest I was a very conservative investor given that I had a liability to pay but now I am looking at different option having worked for Kotak Wealth management at the beginning of my career I have a fair Idea about mutual funds
My portfolio
1. Cash in Bank-
2. Fixed deposits-4,532,460.00
3. Mutual Funds- 1,557,107.43
DSP BlackRock Micro Cap Fund Regular Growth Plan SIP 25000 pm- Current value -51936.
ICICI Prudential Value Discovery Fund Reg Plan – Growth SIP 5000 pm- Current value 21,502.71
HDFC BALANCED FUND – GROWTH- Lump sum – 510,367.61
ICICI Prudential Long Term – Regular Plan – Lump sum Growth- 494,335.26
RELIANCE MONTHLY INCOME PLAN – GROWTH PLAN -Lump sum- 222,007.05
SBI Magnum Balanced Fund-Growth Lump sum- 227,593.84
4. HDFC Child Insurance policy- 120000 Per Annum.
I might need around 20,00,000 from the amount above to complete my registration and interiors for my home which will be given out for rent –Expected around 40000 pm .
Like many I am confused weather to invest in another property or rebalance my portfolio to invest in Equity and mutual funds, please help me design my portfolio to help create good amount of wealth in next 5 yrs.
Dear Naveen,
1 – Any specific reason/objective for saving around Rs45 Lakh in FDs? Do you need to withdraw Rs 20 Lakh out of this corpus?
2 – Existing MF portfolio looks ok.
3 – Do you have adequate life cover? Any other existing life insurance policy?
4 – May I know the plan name of HDFC policy?
5 – Do you have health insurance cover for self/family?
6 – Have you planned for your Retirement & kid’s education goals.
Suggest you to go through the articles listed in the below post;
List of Important articles on Personal Financial Planning.
Hi Srikanth,
Yes I will need about 20 lacs for registration,club facilities ,interiors at.
Except for the cover by companies we don’t have any medical cover.Could you please suggest please suggest good medical plans.
My goal was to buy home without loan that goal is achieved now want to plan retirement corpus.
Shall I move the fd in other assets.
Regards
NAVEEN
Dear Naveen,
Health Insurance : Do not depend entirely on employer provided group cover, kindly read;
Best portals to compare Health insurance.
Best Family floater health insurance plans.
Long term investment in FDs can be avoided. Yes, can be routed to other better investment avenues.
Read: Why one should not invest in FDs for longer period?
Read :
Retirement goal planning.
List of best investment options!
Does expense ratio vary from Sip to Lumpsum inv !? How much…
If I have 10 Lacs in hand and want to invest for the sake of monthly earning after retirement, what will b the good move !? Invest in 4 to 5 diff Lumpsum portfolio ( dividend earning ) or what else !?
Dear RANOBIR,
Expense ratio does not vary between SIP & Lump sum.
It does vary between Regular plans & Direct plans.
Kindly read:
List of investment options!
CAN I HAVE ANS TO MY 2ND PART OF THE QN ?
If I have 10 Lacs in hand and want to invest for the sake of monthly earning after retirement, what will b the good move !? Invest in 4 to 5 diff Lumpsum portfolio ( dividend earning ) or what else !?
Dear RANOBIR,
Are you going to be totally dependent on the income generated on this Corpus (Rs 10 Lakh)??
How much is the expected income and for how long (tenure)?
Do you have any existing investments in MF?
my parents after retirement monthly expenses going to be managed from this investment ( dividend yielded from them0, at least a major part if not fully . i have my 10k + monthly sip and lumpsum (done 2 last yr ) of my own..
we r not going to withdraw this 10L inv soon.
Dear RANOBIR,
If you want fixed and regular monthly income, you may consider SWP (Systematic withdrawal option) set up on a Debt fund or MIP Fund.
You can also consider NCDs (non-cumulative & secured ones) for some portion of your corpus.
In case if you want capital also to be safe, you may consider Post office MIS Scheme and Senior Citizen Savings scheme (if parents are Sr citizens).
Hi Sreekanth…nice article!
i have already invested in Franklin India Taxshield Fund as SIP (Rs. 2500)…..I want to invest in one more ELSS for Rs 3000.
Q. 1. How to invest directly (without agent/mediator) into ELSS?
Q.2. Which ELSS fund you can recommend to me? your opinion plz
thanks,
Prakash Mahadeo Ghule
Dear PRAKASH,
You may consider Birla Tax relief 96 fund.
thanks a lot….good day
Hi Sreekanth,
Thanks a lot for such quick and crisp analysis!
I am investing in Mutual Fund through SIP route from last two years.Request to kindly review my portfolio and suggest for any modifications,if any.
ELSS: Axis Long Term Equity Fund(G)–3000
Large Cap: ICICI Prudential Focused Blue Chip Equity Fund(G)-3000
Small Cap: Franklin India Smaller Companies(G)-2000
Balanced Fund: HDFC Balanced Fund(G)-1000
Diversified Equity:Franklin India High Growth Companies(G)- 1000
I have noticed that the Axis Long Term Equity Fund is under performing. Please suggest whether should I stop further SIP in this fund and shift other ELSS fund?
If yes , then please give your valuable suggestion from below ELSS funds
DSP Black Rock Tax Saver
BSL Tax Relief’96
Reliance Tax Saver
My investment horizon is of long term.
Thanks in advance!
Dear Rahul,
Axis fund has not been up to its mark in the last one year or so.
But, I do not see any big change in their portfolio during this period. So, may be we can give it some more time..
Let’s remember that today’s good performer may become a laggard next year. So, we cant keep churning portfolios.
‘Consistency over a long period of time’ need to be looked at!
Dear Srikanth,Thanks for timely article on ELSS.One question I want to raise with you,which you can forward to relevant authorities.We have got opportunity to switch from one fund ,which is not performing,to another fund which is performing.This should applicable to ELSS funds,keeping Lock in period intact.This will keep fund managers on toes.I hope you understand my point.
Dear Dr Bansal,
Short term volatility (if any) can be seen with all types of funds.
When selecting a mutual fund, let’s invest in a consistent performer and then stick to it for some-time. 1 to 2 years can be a very short term period to measure a fund’s performance (if it has been performing well,for say last 10 years or so).
Great post Sreekanth! thank you.
One query on the capture ratio. Is there any website where these are calculated for us to use? I see VRO does not have that one. Thanks.
Dear Kumar,
Are you referring to Downside & upside capture Ratios?
You can find these details @ Morningstar.in .
For ex: Click here to know Capture ratio details of Axis LTE Fund.
Yes I was. Thanks! I never noticed it.
One request. I really like the way you explain concepts in simple words. Request you to make one post that explains how/when to use these ratios for different types of funds (large, mid, small etc.,).
Thank you!
Dear Kumar…Suggest you to go through this post and let me know if this is what you have suggested .. ‘How to select right mutual fund scheme based on measures of Volatility?‘
Yes, this was what I was looking for. Thanks!