ELSS mutual funds can get you up to Rs 1.5 lakh tax deduction: How to select right ELSS

ELSS funds are equity-oriented mutual funds that primarily invest in equities and equity-related instruments. These have a lock-in period of three years, making them suitable for long-term wealth accumulation. ELSS funds are best suited to investors with high risk appetite and long-term investment horizon of at least 3-5 years.

Getty Images

It is important to conduct thorough research and due diligence to choose the right ELSS fund that aligns with your investment goals and risk profile. Consider factors such as fund performance, fund manager’s track record, investment strategy, and expense ratio.

Getty Images

Review the historical performance of ELSS funds across different market cycles to gauge their consistency and resilience. Look for funds that have delivered competitive returns compared to benchmark indices and peers over the long term.

Getty Images

Opt for a systematic investment plan (SIP) approach to invest in ELSS schemes regularly. SIPs enable investors to benefit from rupee-cost averaging and inculcate discipline in investment while mitigating the impact of market volatility.

Getty Images

a) It is important to note that unlike other equity mutual fund schemes, ELSS has a three-year lock-in period. Hence, the financial goals for which ELSS investments are made need to be planned keeping in mind this lock-in period.

b) Consult a financial adviser or an investment professional to get personalised advice on investing in these schemes.

Getty Images