Understanding Tax Saving Funds

If you are interested in investing, you will quickly discover that there are more than a few options to choose from. If you are interested in finding out about the best tax saving mutual funds, you need to first learn what this is and where you can find them. Here, you can get some of the basic information which you need to begin with before investing in this product.

What Exactly are Tax Saving Funds?

The best tax saving mutual funds, which are also referred to as Equity Linked Savings Scheme or ELSS, is a type of mutual fund product which invests in equity as well as equity related securities. This financial product has a three year lock-in period. As a result, the investments that are made in this scheme are not able to be redeemed for a period of three years.

According to Section 80C of the Income Tax Act, you can invest up to Rs.1.5 lakh in a tax saving instrument, which is deducted from your gross total income.

What Advantages are Offered by ELSS Funds?

An Equity Linked Saving Scheme is an equity-oriented mutual fund that provides tax benefits. These score over the other tax saving products available in several ways.

For example, these only have a three year lock-in period which is lower than other investment options. Also, they aren’t linked to the market and have the potential to help generate significant returns in the long term. Any investor who has a moderate to high risk investment need should consider making an investment in these financial products.

Who Offers the Tax Saving Funds?

The majority of mutual fund companies will offer these products, but remember if you want the best tax saving mutual funds, you will have to do your research to find the right company.

You can learn more about these investment products by visiting the Quantum Mutual Fund website.

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