Investing in Equity-Linked Savings Schemes (ELSS) is not only a great way to save taxes under Section 80C of the Income Tax Act, 1961, but also a lucrative option to build wealth over time. With consistent returns and a mandatory lock-in period of three years, ELSS funds have proven to be a reliable choice for long-term investors. Here’s how a ₹10,000 SIP in top-performing ELSS funds can help you achieve a corpus of ₹1 crore or more.
What are ELSS Funds?
Equity-Linked Savings Schemes (ELSS) are tax-saving mutual funds that invest a minimum of 80% of their portfolio in equities, with the remaining portion allocated to debt instruments. They come with a lock-in period of three years, the shortest among Section 80C investments, making them a popular choice for wealth creation and tax savings.
Why Choose ELSS Funds?
- High Returns:
- ELSS funds historically deliver higher returns compared to other Section 80C investments like PPF or fixed deposits.
- Over the years, some funds have delivered annualized returns exceeding 15%.
- Tax Benefits:
- Investments up to ₹1.5 lakh annually in ELSS are eligible for deductions under Section 80C.
- Long-term capital gains (LTCG) up to ₹1 lakh are tax-free; gains above ₹1 lakh are taxed at 10%.
- Short Lock-in Period:
- The mandatory three-year lock-in period is the shortest among tax-saving options.
Top ELSS Funds for ₹1 Crore Goal
1. Tata ELSS Tax Saver Fund
- Performance:
- ₹10,000 SIP grows to ₹1.05 crore over 18 years (15.65% annualized returns).
- Delivers consistent returns doubling investments approximately every 4 years.
- Fund Details:
- AUM: ₹4,680 crore (as of Sep 30, 2024).
- Expense Ratio: 0.7%.
- NAV: ₹51.58 (as of Dec 5, 2024).
- Top Holdings:
- HDFC Bank, ICICI Bank, Infosys, Reliance Industries, SBI.
- Sector Focus:
- Financials, Automobiles, Technology, Energy, Construction.
2. DSP ELSS Tax Saver Fund
- Performance:
- ₹10,000 SIP grows to ₹1.24 crore over 18 years (17.14% annualized returns).
- Doubles investments every 3 years.
- Fund Details:
- AUM: ₹16,841 crore (as of Sep 30, 2024).
- Expense Ratio: 0.8%.
- NAV: ₹154.67 (as of Dec 5, 2024).
- Top Holdings:
- HDFC Bank, ICICI Bank, SBI, Infosys, Axis Bank.
- Sector Focus:
- Financials, Healthcare, Energy, Technology, Automobiles.
3. Quant ELSS Tax Saver Fund
- Performance:
- ₹10,000 SIP grows to ₹1.29 crore over 18 years (17.56% annualized returns).
- Delivered stellar returns of 23.96% in the past year.
- Fund Details:
- AUM: ₹10,980 crore (as of Sep 30, 2024).
- Expense Ratio: 0.65%.
- NAV: ₹415.10 (as of Dec 5, 2024).
- Top Holdings:
- Reliance Industries, Samvardhana Motherson, JIO Financial Services, Adani Power, Grasim Industries.
- Sector Focus:
- Energy, Consumer Staples, Financials, Healthcare, Automobiles.
How to Start a ₹10,000 SIP in ELSS Funds
- Choose a Fund:
- Compare historical performance, expense ratios, and sector allocations.
- Opt for funds that align with your financial goals and risk tolerance.
- Set Up a SIP:
- Visit your mutual fund distributor or use online platforms like Zerodha, Groww, or Paytm Money to start your SIP.
- Monitor Regularly:
- While ELSS has a lock-in period, review your fund’s performance annually.
- Redeem Smartly:
- After the lock-in period, redeem or reinvest strategically for compounding benefits.
SIP Growth Table: ₹10,000 Monthly Investment
| Duration (Years) | Tata ELSS (₹) | DSP ELSS (₹) | Quant ELSS (₹) |
|---|---|---|---|
| 5 | 8,16,636 | 9,20,365 | 9,56,723 |
| 10 | 23,55,199 | 27,10,340 | 28,45,898 |
| 15 | 56,28,791 | 68,15,478 | 72,65,342 |
| 18 | 1,05,36,692 | 1,24,10,546 | 1,29,94,596 |
Benefits of ELSS Over Other Section 80C Options
| Feature | ELSS | PPF | FD |
|---|---|---|---|
| Return Potential | High (12-18%) | Moderate (7-8%) | Low (5-6.5%) |
| Lock-in Period | 3 Years | 15 Years | 5 Years |
| Tax Benefits | Yes | Yes | Yes |
| Market-Linked Growth | Yes | No | No |
Conclusion
By consistently investing ₹10,000 in ELSS funds, you can create wealth exceeding ₹1 crore while enjoying significant tax benefits. With a short lock-in period and high growth potential, ELSS funds are ideal for investors looking to balance wealth creation and tax planning.
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Disclaimer:
This article is for informational purposes only and does not constitute financial advice. Consult your financial advisor before making investment decisions.
