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finance5paisaaso · 1 year

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What are ELSS funds and how to invest in them?

ELSS funds give you benefits of both capital appreciation and tax savings. It also gives you the option for dividend payouts if you want to receive regular cash flows. ELSS funds invest the majority of their capital in stocks. Since ELSS funds are linked to the share market, it is associated with high risks. So, make sure to analyze your risk tolerance ability before buying any mutual fund scheme. Also, it gives you far better returns than a traditional investment like a fixed deposit or regular deposit. In this article, we are going to learn about what ELSS funds are and how to invest in them.

What are ELSS funds?

ELSS(Equity Linked Savings Schemes) is a type of mutual fund scheme that allows you to invest in the share market and at the same time gives you tax benefits of up to Rs. 1.5 lakhs under section 80C. This is the reason it is also called tax-saving funds. Also, they have a lock-in period of 3 years. So, make sure to go through the fund performance over the last few years, the fund manager’s experience, and the expense ratio of the fund. They do not charge you for entry or exit load.

How to invest in the ELSS funds?

ELSS funds are a type of mutual fund that allows you to invest in them through SIP (Systematic investment plan) or lump sum. It is advised to opt for SIP as it allows you to invest regularly and inculcates disciplined investing within you. Through SIP you can start with as little as Rs. 500.

The first thing you need to do is open a Demat account to invest in ELSS funds.

While opening a Demat account, you will be asked to provide necessary documents such as identity proof, address proof, income proof, bank details, etc to complete the KYC process.

Once the KYC is completed, your Demat gets activated.

If you want to buy the ELSS fund offline, you need to contact the ELSS fund distributor.to assist you in choosing the scheme and filling out the form.

If you want to buy an ELSS fund online, visit the AMC website or the RTA website, or online mutual fund platforms.

You can register on any of the above websites by entering your mobile number, email address, and PAN number to complete the KYC process.

Once the KYC is completed, you can select the type of mutual fund scheme you want to invest in. make sure to choose a mutual fund platform that gives you the option to select between (Regular & Direct) and (Growth or dividend payout).

The next step is to select whether you want to make a SIP or lump sum investment. You can take the help of a SIP calculator to calculate the estimated returns.

Conclusion

Investing in an ELSS fund gives you the benefits of growing your wealth over the long term and tax benefits of up to Rs. 1.5 lakhs. Before choosing any scheme, make sure to analyze your investment objective, and know how to select an ELSS scheme that suits your requirements and how to invest in them.

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finance5paisaaso · 1 year

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Steps to use SIP calculator easily

Investing in mutual funds through SIP is the most preferred investment option among investors as it gives way better returns than fixed deposits. SIP allows you to invest in the share market with as little as Rs. 500 and using a SIP calculator helps you make investment decisions more effectively. SIP calculators gauge the estimated returns on your mutual fund investment within seconds. You can use SIP calculators for mutual funds, index funds, and ELSS funds. In this article, we are going to learn about the mutual fund SIP calculator, how does SIP calculator works, the benefits of SIP calculator, and the steps to use a mutual fund SIP calculator easily

What is a SIP calculator?

SIP calculator is a tool that is easily available online which helps you to gauge the estimated return on your SIP investment throughout the tenure. It gives you the estimated total returns along with the total interest earned on your investment and the total invested amount. The SIP calculator uses compound interest formula to calculate returns and compound interest helps you to grow wealth in the long run. However, the real returns may vary from the estimated returns. So make sure to analyze the possible outcomes and the risk associated with it. It is easily available on the internet and easy to use.

Steps to use the SIP calculator

Open the SIP calculator.

Enter the SIP amount you want to make every month.

Select the frequency of the SIP. It can be monthly/quarterly or half-yearly.

Enter the investment years and the expected rate of return per annum on your investment.

Within seconds, the calculator will gauge the total maturity value at the end of the tenure of your investment along with the total invested amount and total interest earned on your investment.

You can change the inputs as per your wish. It helps you to analyze how much investment you need to make to achieve your goal.

Let's understand how to use the SIP calculator with an example, let's say you started a monthly investment of Rs. 25,000 for 30 years at a 12% expected rate of return per annum. The total maturity will be Rs. 8,82,47,844, the estimated return will be Rs. 7,92,47,844 and the total invested amount during the tenure of the investment is Rs. 90,00,000.

To conclude, Mutual fund investment through SIP helps you to increase your wealth exponentially. Moreover, you can invest pocket-friendly amounts at regular intervals which is not hard on your budget. However, check the mutual fund's past performance over the years, fund manager experience, expense ratio, and various other factors before investing in any mutual fund. Also, analyze your investment objective, tenure of your investment, and the risk tolerance ability to make a better financial decision.

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