If you are wondering what ELSS stands for, then it refers to
Equity Linked Savings Schemes. These are considered diversified funds which are
primarily invested in equity related investments. The good thing ELSS is that
here investment is made in companies that have strong business model and a very
good growth potential.
Let us look at Indian Money review of aspects you need to check before making
an investment in ELSS.
IndianMoney.com
Review of ELSS
Many people get scared when they hear that investment will
be made in equities. But, on the contrary, you get the assurance of better
returns when you make investments for a longer period of time.
Our focus here will be on analyzing few things that you need
to keep note of while investing in ELSS.
Types of ELSS
As per Indian Money CEO, C S Sudheer, there are two types of ELSS, one is known as
dividend funds and the other is called growth funds.
You can make an investment in two ways; as a lump sum amount
or through SIP where fixed amount is invested on a monthly basis. This way you
get the advantage of rupee cost averaging.
Lock-in Period
As an investor you need to be aware of the fact that there
is a lock in time period of 3 years for this type of investment. However, the
good thing is that ELSS has shortest lock in since PPF has a 15 year lock-in
and NSC has 5 years lock in period.
Additionally, if you are able to hold the investment for
seven to ten years then you can expect better returns.
NAV Fluctuations
You need to be aware of the fact that investment in equity
funds is always risky and a fluctuation in Net Asset Value (or NAV) is always a
possibility. Thus, the best thing to do is to make a long term investment.
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